28 July 2014 by Cliffe Dekker Hofmeyr

Competition Tribunal issues reasons for dismissing Cape Gate exception application

On 25 July 2014, the Competition Tribunal (Tribunal) issued its reasons for dismissing the exception application brought by Cape Gate (Proprietary) Limited (Cape Gate) against a complaint referral lodged by the Competition Commission (Commission) in August 2013.

Lerisha Naidu, Senior Associate in the Competition practice at Cliffe Dekker Hofmeyr explains, “In the referral, the Commission alleged that Cape Gate (together with other respondents) contravened section 4 of the Competition Act, 1998 (Act) by entering into an agreement or engaging in a concerted practice to fix the purchase price of scrap metal in South Africa.  In particular, the Commission contended that the parties operate as a buyer's cartel in the market for the purchase of scrap metal.  The Commission's referral papers indicate that the respondents adopted interrelated mechanisms to coordinate the purchase of scrap metal, including engagements and related agreements with scrap merchants.”

Naidu says that on 2 October 2013, Cape Gate filed an exception application on the grounds that the Commission's referral was contradictory, vague and embarrassing and lacked essential averments necessary to sustain a complaint.

“In respect of the allegation that the referral lacked the averments necessary to sustain a complaint, it was argued by Cape Gate that, in order for a complaint to be sustained under section 4(1)(b) of the Act, it must be alleged that the relevant parties are in a horizontal relationship (ie that a competitive relationship exists between the parties).  Cape Gate argued that the allegations of the Commission were unsustainable on this basis as the implicated parties (being scrap customers and scrap merchants) operate at different levels of the supply chain and, as such, could not properly be categorised as competitors.  On this issue, the Tribunal refrained from determining whether the Commission's case was unsustainable for want of establishing the presence of a competitive relationship between the parties.  The Tribunal found that, in order to express a view on the presence or otherwise of a horizontal relationship, evidence would need to be led to understand the relationship between the respondents and scrap merchants.  The Tribunal therefore dismissed the application for this reason (among others),” she notes.

Naidu add that this case is a reminder that, while exception applications are procedural in nature and are designed to ensure that respondents are apprised of the case against them, the success of such applications often turns on a substantive assessment of the merits of the matter (and a concomitant consideration of all available evidence). 

“In such cases, the Tribunal appears to be disinclined to find in favour of applicants where a full ventilation and consideration of the facts and evidence has not occurred.”

The information and material published on this website is provided for general purposes only and does not constitute legal advice.

We make every effort to ensure that the content is updated regularly and to offer the most current and accurate information. Please consult one of our lawyers on any specific legal problem or matter.

We accept no responsibility for any loss or damage, whether direct or consequential, which may arise from reliance on the information contained in these pages.

Please refer to the full terms and conditions on the website.

Copyright © 2020 Cliffe Dekker Hofmeyr. All rights reserved. For permission to reproduce an article or publication, please contact us cliffedekkerhofmeyr@cdhlegal.com