Tribunal rules on interlocutory application in Pioneer Fishing case

7 Dec 2015 5 min read Competition Matters Article

On 31 August 2015, the Competition Tribunal heard an interlocutory application by Pioneer Fishing Proprietary Limited (Pioneer Fishing) seeking two orders. The orders sought are first, that the Competition Commission must provide proper responses in respect of Pioneer Fishing’s request for further particulars (Application for Further Particulars), and secondly, an application to strike out from the Commission’s response any reliance on any agreement to allocate territories or markets in contravention of s4(1)(b)(ii) of the Competition Act (Application to Strike Out). The Application for Further Particulars was partially granted and dismissed by the Tribunal, while the Application to Strike Out was dismissed by the Tribunal in its entirety.

By way of background, the Commission initiated a complaint against Pioneer Fishing in March 2011. After investigating the complaint, the matter was referred to the Tribunal for adjudication in March 2014. In order to respond to the Commission’s Referral, Pioneer Fishing requested further particulars from the Commission in August 2014. The Commission duly responded in November 2014.

Application for Further Particulars

  • Pioneer Fishing argues that the Commission’s Referral and its responses for Further Particulars are vague, evasive and contradictory that it prejudices Pioneer Fishing in its ability to know the case that it must meet. Pioneer Fishing raised two main concerns in this regard: first, the relationship between the market and the conduct and secondly the nature of the oral agreement.
  • In the first instance, Pioneer Fishing argued that there is confusion about the multitude of likely markets referred to by the Commission in its Referral. The Tribunal found Pioneer Fishing’s arguments to be unconvincing and took the view that the only conduct referred to by the Commission is that of market division of one product being that of horse mackerel. Moreover, all Pioneer Fishing needs to know in order to plead to the Commission’s allegations is a clear description of how the market for the supply of horse mackerel is geographically divided in South Africa. The Commission provided a clear and adequate description of the market likely to be affected by the conduct. Therefore, there was no need for a request for further particulars from the Commission.
  • In the second instance, the Commission in its Referral alleges that an oral agreement was concluded at a meeting between certain identified individuals. However, Pioneer Fishing raises that the Referral does not state when and where this meeting allegedly took place. Furthermore, Pioneer Fishing enquired whether the terms of the oral agreement constituted express, tacit or implied terms.
  • The Tribunal held that the Commission provided Pioneer Fishing with adequate information to be able to investigate this information for its own account. However, the Commission was ordered to provide further particulars as to whether the oral agreement was reached at a single meeting or whether the agreement was reached as a result of a process and secondly should the Commission become aware of the place where the oral agreement was concluded, it was ordered to provide this information to Pioneer Fishing. On the issue of terms of the oral agreement, the Tribunal relying on previous case law held that it is unnecessary for the Commission to provide the precise details of an alleged agreement as the Commission is not trying to enforce the oral agreement, but contends that the parties engaged in prohibited conduct, in contravention of the Competition Act.  

Application to Strike Out

  • Pioneer Fishing argues that the Commission in its response for further particulars alleged that it was charging Pioneer Fishing with two sets of agreements, namely an oral agreement as well as a written restraint contained in a sale agreement. The oral agreement was expressly referred to in the Commission’s Initiation Statement, whereas the written restraint was a new complaint that was not previously contemplated in the Initiation Statement and Referral to the Tribunal. To this end, Pioneer Fishing argued that the Commission is not entitled to rely on the restraint in the sale agreement because it was not initially included as part of the Initiation Statement. Moreover, the Commission’s reliance on the restraint in the written agreement has prescribed in terms of s67(1) of the Competition Act, even if it was tacitly initiated by the Commission at the time of responding to Pioneer Fishing’s request for further particulars.
  • The Tribunal considered whether or not a fair reading of the Commission’s Initiation Statement and Referral lead to the conclusion that the written restraint is being relied on as a prohibited conduct in these documents.
  • Based on previous cases, the Tribunal held that the Initiation Statement is at the very start of the Commission’s investigation, at which stage it does not have all the particularities of the conduct in question. During the course of the Commission’s investigation, further information will come to light and this is revealed in the Referral. The Tribunal urged that one must not confuse the Initiation Statement with the Referral. Moreover, the Tribunal noted that Pioneer Fishing is not entitled to respond to the Initiation Statement, but will in time be called on to answer the charge in the Referral after the Commission’s investigation comes to a close.
  • After a detailed consideration of the wording in the Initiation Statement and Referral, the Tribunal concluded that from a fair reading of the two documents, an inference can be drawn that the complaint was initiated and referred, not only in respect of the alleged oral agreement relating to the market division of specified territories within South Africa, but also in respect of the restraint relating to the 20% of the quota purchased from the respondent, Blue Continent Products Proprietary Limited. Therefore, the restraint is not a new complaint about a different prohibited practice not raised in the complaint. The Application to Strike Out was therefore dismissed.   

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