Competition Commission v Loungefoam (Pty) Ltd and Others

The Competition Commission initiated a complaint in September 2007 against Loungefoam and Vitafoam for price fixing and market division in the foam manufacturing industry. The complaint was later expanded to include Feltex and other entities. In September 2008, the Commission referred the matter to the Competition Tribunal alleging contraventions of sections 4(1)(b)(i) and (ii) of the Competition Act 89 of 1998. The respondents admitted participating in a "Foam Forum" but claimed they were part of a single economic entity (Steinhoff) and thus exempt. In February 2010, the Commission applied to the Tribunal to amend its referral to include: (a) a new allegation that Feltex participated in price fixing (Feltex amendment); (b) a refutation of the single economic entity defence and an allegation of collusion between Steinhoff and Kap (collusion amendment); and (c) a prayer for administrative penalties against parent companies including Steinhoff Africa (penalty amendment), which also sought the joinder of Steinhoff Africa. The Tribunal granted all amendments and the joinder. The respondents appealed to the Competition Appeal Court (CAC), which overturned the Tribunal's decision on 6 May 2011. The Commission then sought leave to appeal directly to the Constitutional Court without first seeking leave from the CAC.

• Whether section 63(2) of the Competition Act creates an absolute bar to direct appeals to the Constitutional Court without first seeking leave from the Competition Appeal Court
• Whether it is in the interests of justice to grant leave to appeal directly to the Constitutional Court under section 167(6) of the Constitution
• Whether the Commission's delay in launching its application warrants refusal of condonation
• Whether the Commission must initiate a complaint against a specific party before it can refer allegations concerning that party to the Competition Tribunal
• Whether the Tribunal may amend a complaint referral to include parties not specifically named in the original complaint initiation
• Whether parent companies can be held liable for contraventions committed by their subsidiaries under the Competition Act

The application for leave to appeal was dismissed with costs, including the costs of two counsel.

Where a litigant seeks leave to appeal directly to the Constitutional Court from the Competition Appeal Court, the interests of justice under section 167(6) of the Constitution require a demonstration of compelling circumstances that would justify avoiding the ordinary appellate route through the Supreme Court of Appeal, particularly where the litigant has failed to first seek leave from the Competition Appeal Court as contemplated in section 63(2) of the Competition Act. The importance and public interest nature of the issues raised, standing alone, are insufficient to justify direct access where the litigant has not demonstrated that the Supreme Court of Appeal could not deal with the matter expeditiously or give finality to the issues, or that substantial injustice would result from following the ordinary appellate route. Section 63(2) of the Competition Act, whether interpreted as creating an absolute bar or as relevant to the interests of justice enquiry, must be interpreted consistently with the Constitution and serves the purpose of ensuring that appellate decision-making is informed by the expert views of the specialist Competition Appeal Court.

The Court noted, without deciding, two possible interpretations of section 63(2) of the Competition Act: (1) that it creates an absolute bar to direct appeals to the Constitutional Court or Supreme Court of Appeal without first obtaining leave from the CAC, based on the use of the word 'only' and the definition of 'any law' as excluding the Constitution itself; or (2) that the Constitution, as supreme law, falls within 'any law' in section 63(1)(a), making section 63(2) adjunct to rather than exclusionary of the Constitution's appellate structures, thus requiring CAC leave unless the interests of justice permit direct access. The Court observed that both interpretations could be constitutionally compliant but declined to resolve the conflict as it was unnecessary for the decision. The majority also noted that until the Legislature decides otherwise, the Supreme Court of Appeal serves as a filter in the appellate hierarchy even in matters not explicitly involving development of the common law. Maya AJ remarked that the Commission's assumption that it would not succeed before the Supreme Court of Appeal based on perceived differences between the Woodlands decision and the CAC judgment 'deserves no credence'. The Court also commented that the Commission had 'bypassed' the CAC in seeking direct access to the Constitutional Court.

This case clarifies the relationship between section 63(2) of the Competition Act 89 of 1998 and section 167(6) of the Constitution regarding direct access to the Constitutional Court from the Competition Appeal Court. It establishes that litigants seeking to appeal from the CAC to the Constitutional Court must demonstrate compelling circumstances justifying direct access in the interests of justice, particularly where they have not first sought leave from the CAC or the Supreme Court of Appeal. The judgment emphasizes the important role of the CAC as a specialist tribunal whose expert views should inform higher appellate decision-making, and the Supreme Court of Appeal's function as a filter in the appellate hierarchy. The case also touches on important procedural issues concerning the Competition Commission's powers to amend complaint referrals and join parties to proceedings, though these substantive issues were not ultimately decided. The dissent signals continuing debate about the proper interpretation of section 63(2) and the circumstances warranting direct access to the Constitutional Court in competition matters.