By Tayla Bruce and checked by Jayna Hira
Background
On 3 November 2010, the Competition Commissioner, acting on behalf of the Competition Commission (“the Applicant”), initiated a complaint against several firms in the furniture removal industry (“2010 Complaint”). The 2010 Complaint alleged that these firms had been engaged in multiple instances of “cover quoting” or “cover pricing”, which practice entails the collusion between suppliers in submitting fictitiously high quotes to customers, in order to ensure that the supplier submitting the lowest quote is guaranteed the customers contract. The Commission alleged further that this collusive tendering constituted a breach of section 4(1)(b)(i-iii) of the Competition Act 89 of 1998 (“the Act”).
The 2010 Complaint did not cite Pickfords Removals SA (Pty Ltd (“the Respondent”) in its initiation statement, but rather cited the Respondent in a further initiation statement on 1 June 2011 (“2011 Complaint”), which concerned the same practices as the 2010 Complaint. On 11 September 2015, the Commission laid a prohibited practice complaint against the Respondent (“complaint referral”), as provided for in section 4(1)(b) of the Act, with the Competition Tribunal. The complaint referral made reference to the 2010 and 2011 Complaint. The Respondent excepted to the complaint referral on the basis that:
- the conduct complained of was time-barred in terms of section 67(1) of the Act; and
- it would offend the principle of legality and defeat the purpose of the Act to permit the Commission “to turn back the clock”.
Accordingly, the Constitutional Court had to consider whether the 2010 Complaint, alternatively the 2011 Complaint constituted the “trigger event” for purposes of section 67(1), as a number of counts of prohibited practice against the Respondent would be timely if 3 November 2010 was the end point, but would be out of time if 1 June 2011 was deemed to be end point. The Respondent alleged that it was the 2011 Complaint that constituted the “trigger event” for the commencement of the running of the three-year period as set out in section 67(1). Conversely, the Applicant contended that it was the 2010 Complaint that was the “trigger event”, in that the 2011 Complaint merely constituted an amendment to the 2010 Complaint.
In its assessment, the Constitutional Court agreed with the Competition Appeal Court in that the 2011 Complaint was merely an amendment of the 2010 Complaint. The Constitutional Court held that the 2011 Complaint emanated from information which came to light pursuant to the Commissions further investigations into the 2010 Complaint and as such did not constitute a separate, self-standing initiation.
Moreover, the Constitutional Court had to determine whether section 67(1) of the Act constitutes an absolute prescription provision, or a procedural time-bar provision, in which event a party’s non-compliance with same can be condoned in terms of section 58(1)(c)(ii) of the Act.
The Constitutional Court considered which of the above interpretations would limit the right of access to courts, as enshrined in section 34 of the Constitution. It was held that a rigid, inflexible interpretation of section 67(1) would fly in the face of the purpose of the Act and would drastically undermine the right of access to courts. Thus, the interpretation of section 67(1) as a procedural time-bar, permitting condonation in instances of non-compliance, was found to be the purposive and constitutionally complaint construal.
Court held
In a unanimous judgement, the Constitutional Court upheld the Applicant’s appeal and concluded that:
- the initiation date in respect of the matter is 3 November 2010;
- section 67(1) of the Act is a procedural time-bar and thus capable of condonation;
- section 58(1)(c)(ii) of the Act expressly grants the Tribunal the power to condone non-compliance with section 67(1) of the Act, so long as good cause is demonstrated;
- the exception brought by the Respondent is dismissed; and
- the matter be remitted to the Competition Tribunal for further hearing.
Value
It is constitutionally compliant and better aligned with the purposes of the Competition Act 89 of 1998 (“the Act”), to interpret section 67(1) of the Act as a procedural time-bar, rather than a substantive time-bar, which places an absolute prohibition on the initiation of a complaint in respect of a prohibited practice, more than three years after the cessation of that practice.
Meta Description
This case considered whether section 67(1) of the Competition Act 89 of 1998 (“the Act”), constitutes a prescription provision, or a procedural time-bar provision, in which instance the event of non-compliance may be condoned in terms of section 58(1)(c)(ii) of the Act.
Focus Keywords
Competition Act 89 Of 1998, Access to Courts, Constitution of the Republic of South Africa, Competition Commission, Competition Appeal Court, Competition Tribunal, Prescription, Time Bar Provision, Collusive Tendering, Cover Quoting, Cover Pricing.
