A consideration of due process and procedural fairness with regard to market inquiries conducted by the Competition Commission

The panel overseeing the Competition Commission's healthcare inquiry has issued a timetable for the commencement of that inquiry.  On 31 May 2014 it is expected to release a statement of issues and administrative guidelines for public comment. 

It is important to consider the procedural framework within which the inquiry will take place. Procedural issues enjoy a heavy focus in competition law.  In complaints brought before the Competition Tribunal procedural issues have dominated appeals to higher courts. 

In Competition Commission of South Africa v Senwes Limited the Constitutional Court found that the Competition Act gives wide inquisitorial powers to the Competition Tribunal.  It is important to consider the powers of the panel that will oversee the healthcare inquiry in light of the fact that the protection of the Constitutional rights of the firms subjected to the enquiry merit protection.

The procedures adopted in market inquiries will, firstly, be subject to constitutional principles.  It is  useful to draw on principles which have been established with regard to presidential commissions of inquiry because of the analogous of commissions of inquiry and market inquiries.  Guidance can also be taken from similar market inquiries undertaken in other jurisdictions.  A useful document to consider in this regard is the UK Competition Commission's Guidelines for Market Investigations published in April 2013.

Commissions of inquiry

Traditionally, presidential commissions of inquiry were seen as administrative rather than judicial processes.  For that reason procedural fairness was not a requirement in their proceedings.  A distinction was drawn between the recommendations of a commission and a subsequent decision made by the president and since the function of a commission was seen to be the determination of facts and the making of recommendations, which were open to acceptance or rejection by the president, procedural fairness was not regarded as a priority in a commission's functions.  The reasoning behind this was that because the findings of a commission were non-binding there was no need to ensure that principles of due process were given the strict adherence which they are afforded during judicial processes.

There has however been a clear move in the direction of greater adherence to procedural fairness during the proceedings of commissions of inquiry.  The reality is that while the findings of commissions of inquiry are not binding, it may follow that such findings are not questioned by the president and could therefore have significant effects on persons implicated in such findings.  The Constitutional Court's decision in case of President of the Republic v SARFU is a landmark decision in this regard.

Recommendations of a commission of inquiry also satisfy all the elements of the definition of administrative action as set out in the Promotion of Administrative Justice Act 3 of 2000.  That Act sets out significant fair procedure requirements and these must therefore apply to the proceedings before commissions of inquiry.

Section 3(1) of the Commissions Act grants to a commission powers similar to a High Court to summon witnesses.  Section 6(1) of that Act provides that a person who has been summoned and who fails to attend, or fails to answer fully and satisfactorily a question lawfully put to him/her, is guilty of an offence.  In this respect the Commissions Act clearly limits a witness' privilege against self-incrimination and right to remain silent.

It is important to remember that the president may only grant powers under the Commissions Act if the Commission is investigating a matter of "public concern."  Due to the Commission Act's somewhat more harsh operation, the public concern requirement serves to limit the range of matters in respect of which the president may confer powers of compulsion. Note that the requirement is one of public concern and not mere public interest.  Public concern attracts a higher threshold; generally it is a requirement for a significant segment or portion of the population to hold such a concern.  Witnesses can therefore be summoned by commissions to answer questions which could infringe the constitutional right to privacy.  This infringement can however be justified if the answers to such questions are relevant to the objects and terms of reference to the inquiry.  In this regard, section 36(1) of the Bill of Rights provides for the limitation of rights contained therein.

In S v Naude [1975] 2 All SA 244 (A)the court held that a person retains his/her right against self-incrimination during the questioning procedure of a commission of inquiry, but this right exists only in respect of specific incriminating questions and a person cannot simply refuse altogether to give evidence.

The Constitutional Court's judgment in Ferreira v Levin NO also made it clear that the privilege against self-incrimination is not so limited in its application to only apply to arrested and detained persons, but that it is not an absolute right either. In any event, the privilege against self-incrimination does not apply merely to arrested or detained persons and this principle may be applied in other situations, such as questioning before another organ of state.

The law that applies to the procedural framework of commissions of inquiry already contains useful principles to draw on when considering the procedures to be followed in market inquiries.

Market inquiries

The Commission is permitted to conduct a market inquiry in any manner, subject to the following provisions of the Competition Act:

• Sections 44, 45 and 45A in terms of which a person submitting information may identify information that it claims to be confidential.  The Competition Tribunal is the arbiter if a decision must be taken on whether the information is confidential or not and provides for appeals in this regard to the Competition Appeal Court.
• Section 49A which states that a person may be summoned to be interrogated before the Commission.  However, a person is not obliged to answer a question if it is self-incriminating and any self-incriminating statement given is not admissible in evidence against the person who made it, except in criminal proceedings for perjury.
• Section 72 which holds that a failure to answer truthfully constitutes an offence.  This section applies subject to section 49A – as above – and section 56 which provides that the law relating to a witness' privilege in a criminal case applies equally to a person who provides information during a hearing but that the Competition Tribunal may order a person to answer any question, even if it is self-incriminating to do so.

During market inquiries parties may be faced with a situation where adverse evidence is presented against them, either with or without their knowledge, at various stages during the proceedings.  It is in these circumstances where the panel would have the duty, at least if it wishes to rely on the evidence, to allow the affected party to reply to the adverse allegations. 

Various procedures have been adopted internationally to accommodate an affected parties' right of reply.  The UK Competition Commission's Guidelines for Market Investigations sets out that investigations must be disciplined and fair and thatthe requirement of fairness includes giving the parties opportunities to understand the Commission's analysis affecting them.  The UK Enterprise Act also states, in section 169, that if a decision is likely to have a substantial impact on the interests of another person, such a person is to be consulted before such a decision is made.  

The UK's Guidelines for Market Investigations also provides for an issues statement to be released by the Competition Commission at an early stage in an investigation.  The statement must set out the theories of harm which is intended to be pursued.  Parties may then make submissions on the issues statement.  On occasion specific pieces of technical analysis may require discussion between a party and the Commission and meetings are arranged for this purpose.  Furthermore, the Commission may also send ('put-back') text to parties to enable them to verify the correctness of certain content (usually information supplied by them) and identify any confidential material, prior to any publication.  Provision is also made for a private hearing to be held with parties ahead of publication of the provisional findings for the purpose of testing evidence and for the parties to respond to the views of the decision-makers.  If the Commission finds that an adverse effect on competition exists, notice will be given of its provisional findings and proposed remedies and parties are again afforded an opportunity to respond to these findings.  A response hearing will be held and the parties may then respond orally or in writing.

Conclusion

It is expected that the healthcare inquiry in South Africa will adopt similar procedures to ensure that fairness is guaranteed during the inquiry.  In addition to that, principles which apply to commissions of inquiry can easily be transposed to market inquiries due the analogous nature of their processes.  The nature of the protection offered to participants will be time-consuming but this is understandable given the wide-ranging scope of the inquiry.