What is the Competitions Process & how does it work?
This is the process we went through. The process became somewhat muddled once the Tribunal became involved, mainly because prior cases have always had legal representation. We all muddled along but the outcomes were timely and ordered. The process is fair and sensible. We were somewhat disadvantaged since we did not have a legal background. But this can be overcome with application and determination. In the back of our minds, throughout the process, was the thought that nobody knew our business better than we did.
If you believe that you have a case, it is not immediately possible to bring the case before the Tribunal. It is first necessary to utilise the services of the Competition Commission. The Commission is basically a public body empowered to investigate and prosecute contraventions under the Act. The Commission has a duty to serve all South Africans equally. It essentially has a year to investigate any case brought to its attention.
After a year, the Commission must either prosecute a case or issue a letter of non-referral. A letter of non-referral has been described as a Dear John letter in competition law. It says, the Commission does not think it should prosecute, and so if you want to, go to the Tribunal at your own cost. The other alternative available to the Commission is to get the parties to consent to a course of action, which is then ratified by all parties. The letter of non-referral sets out the situation as the Commission sees it and a synopsis of its findings. This notice is final and no further correspondence is entered into.
There are a few things to note. Firstly, a copy of the Act is available on the web at www.compcom.co.za and previous Tribunal decisions are available from www.comptrib.co.za . Through the Comptrib web-site, access to Competitions Appeal court decisions exists.
The Act is simply written and someone took a great deal of trouble when drafting it. Fear not, have a look at the Act it is the kind of thing one can read in the bath. It was, I believe, intended to be read and understood by all firms involved in commercial activity. The relevant parts of the Act probably only take up about 10 pages, so it is well worthwhile reading. A booklet detailing the Act and the regulations is also available from the Commission. The regulations and rules of the Commission Tribunal are important when running a case, so do not overlook them once you become involved.
It is important to initiate the process on the appropriate form also available on the compcom web site. If you think you have a case, get things started as soon as possible, and fill in and submit the appropriate form. It assists the Commission if any proofs are sent to them. The process seems interminable once one becomes involved, and it is always possible to withdraw from a complaint at no cost. Since commercial issues are invariably time sensitive, it pays to get the process started as soon as possible. Delay hurts the person with the most to gain.
If the Commission decides to prosecute, it is their job to do the work, lucky you. I have no experience in this regard and perhaps someone who has had this privilege can offer some comment.
If on the other hand, one possesses a letter of non-referral, and one wants to take matters further, then a crucial decision needs to be made. Either go the DIY route or pay for expertise. If competition lawyers are needed, then be prepared to pay dearly for the services of what is probably the most expensive sector of the legal fraternity. Remember too that cases involving price discrimination are to date rare and very complex. There are not many lawyers or economists that have experience in these issues. When we initially approached an attorney, the message we received was that nobody really wanted to get involved. Not only because we had very little money but more importantly because the lawyers themselves did not feel competent to handle competition cases. This honesty was greatly appreciated. Ultimately, we had to represent ourselves.
To put it into perspective, Prof. David Unterhalter of the Wits Applied Legal Dept represented Sasol as advocate on their half. Then add the less senior advocate and the attorneys and the bill quickly mounts up. Sasol also employed the services of specialist commercial and academic economists to assist their case. The bill must be considerable. This is the team that Sasol employed notwithstanding the existence of both an in-house legal counsel and economist.
If you elect the DIY route, be prepared for a long haul. From the time we received the letter of non-referral, one of us worked almost full time on the case for over a year. You need only imagine the impact this has on our business! In terms of other costs, you will need to budget for travel and accommodation to and from Pretoria. We tried to have the hearings here in the Eastern Cape, but to no avail. Having some idea of the pressures under which the Tribunal works, this is sensible. Without substantial changes to the workings of the administration Pretoria seems the only option available.
Also to be budgeted are costs relating to incidental matters such as copying, couriers, telephone and many hours searching the internet. The internet was a valuable and indispensable source of information. Do not neglect it. In our situation, it was absolutely critical to our understanding of the issues and the law of other countries.
Seek to depersonalize any ill feelings. The hearings are not a place to gripe. They rely on evidence, fact and rational argument. Emotions are not constructive, and tend to lead one in the wrong direction. Prepare well and have a plan. Then stick to that plan.
To summarise the proceedings at the Tribunal, the following may be of use.
1) Find and complete and send off the appropriate form, and enclose an affidavit and a copy of the letter of non-referral. This needs to happen within working 20 days of receipt of the letter of non-referral.
2) The other party has 20 working days to respond to the allegations made, also by way of affidavit.
3) Within 10 working days answer the response in affidavit form.
The above are critical, they lay the foundations for the case. Take great care that you get this right, it is vital. A clear head, rational layout and sound understanding are required.
4) Expect a conference call or a meeting of the parties to the dispute. The purpose of which is to set out timetables for the case. Who needs to do what and by when. This process is a bit of a negotiation, and the Tribunal member responsible will tell you what to do. Expect also that the timetable will be strictly enforced. This is necessary in order to protect the complainant in a matter.
5) Discovery is a process whereby one reveals the information that is to be relied upon, and requests information from the other side. Basically, since confidentiality of documents will invariably be insisted upon, anything that the other side may have that may assist you can be requested. It is also possible to demand documents from others not involved in the case, provided that the request is reasonable and important to the case. Witness summaries also need to be prepared and presented.
6) Once all the documents are swapped and the documentation is complete, a date is set down for the hearing. In our matter, this took six months, and was considered to be a bit rushed. Someone is asked to prepare the Tribunal bundle, a copy of the documentation that everyone receives. This bundle is numbered and indexed. Its purpose is to make it easy for everyone to have the same bundle and thereby assist all in finding the relevant papers contained in the bundle.
7) The hearing takes place before three members of the Tribunal. Everybody wears suits. Within some rules of normal decorum, the hearing is relatively informal, although very intimidating at first. The person making the allegations goes first, and questions any witnesses. The other side gets to question each witness as they finish. The Tribunal has the right to ask questions and often does so.
8) Then the defence gets to present their case and the complainant gets to question their witnesses. This process continues until complete and all the evidence is on the table.
9) A transcript of the evidence is prepared by the Tribunal and made available to all parties.
10) The complainant then prepares what is known as heads of argument. This is a summary of the pertinent points raised in the evidence and any legal or economic argument that may be important. Upon receipt of the heads, the defendant prepares his own heads and sends them to the complainant. Note that all documents are copied to the tribunal for their records.
11) The final hearing is scheduled and each side has a chance to present the final arguments of their case. The complainant has a chance to rebut anything raised by the defendant. The case is adjourned and the judgment is awaited.
Our experience is that the Tribunal administrative staff is very helpful in explaining the processes. Apparently even the lawyers will call on this expertise when unsure of the processes involved. Expect fair treatment and a proper hearing. This you will get. The members of the Tribunal prepare thoroughly and had clearly read all the documentation prior to the hearings. The Tribunal cannot make your case for you but it does seek clarification of matters that it thinks require explanation. Our perception is that it seeks the truth of the matter, whatever it may decide that to be.
On discovering documents, ask the right questions and seek the right documents. Be careful of the formats if you need to later compare data. Things like strategic plans, marketing plans, price lists, market shares etc. can be discovered. At this stage you unearth the things that are suspected but not yet proven. Whatever is discovered forms part of the bundle and record of the Tribunal.
The process of questioning witnesses was probably the most enlightening part of the process for us. There is an advantage to preparing witnesses, and the questions to be asked. But the process of cross-examination is likely to extract any matters that require clarification or challenge.
More important than what was said are those things left unsaid. Omissions in evidence are difficult to pick up, particularly when occupied and focused with a particular line of questioning. It is of great assistance to have a colleague present to assist in this regard. A good devils advocate (not necessarily of the legal kind) on your side is suggested if not essential.
Clearly the Tribunal is busy. Please treat their time as precious and avoid repetitious and unimportant issues. You only need say something once and it is in the record. Stick to the point and this will assist the process, to everyone’s advantage. The Tribunal is not a forum to gripe. It has the function of protecting competition, a very important and necessary function. It is not a forum to settle ordinary commercial disputes, and it has no power to do so. The Tribunal is empowered only to consider matters that relate to the Competition Act. It exists in order to manage the competitive processes in our economy. Treat it with respect, for it deserves far more than it receives.
After the judgment of the Tribunal there exists the possibility of an appeal. At this stage I must say that I have no idea as to how the ordinary businessman could manage this process. The Competitions Appeal Court has complex rules and will I think require the services of both an advocate and attorney. At this level, the ordinary businessman and particularly the small businessman will be unable to cope. This I suppose is the inevitable barrier to justice in competitions matters. Unless you have sufficient money, the process itself is ultimately fatal to the small business. Quite how this inevitability squares up to the purposes of the Act is a question that still needs to be answered. But we have not got there yet. So we simply muddle along, doing the best we can.
In the next comment, we look at price discrimination, what it entails and some of the complexities.
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Disclaimer: This site does not profess to offer legal assistance or interpretation. It’s content reflects the view and experience gained by of the author during a hearing at the Competitions Tribunal of South Africa. It may help you to figure out what happens & why.