Clover Industries (Pty) Ltd and Others v The Competition Commission and Others

This was an application for leave to appeal against an order of the High Court dated 19 September 2007. Clover Industries (1st and 2nd appellants) had entered into a corporate leniency agreement with the Competition Commission on 3 February 2006 regarding anti-competitive conduct. The appellants sought to appeal two main issues: (1) whether a letter from dairy farmer Mrs Malherbe constituted a 'complaint' in terms of section 49B(2) of the Competition Act 89 of 1998, and if so, whether it had been investigated within the prescribed one-year period as required by section 50(1); and (2) an appeal against a review concerning proceedings before the Competition Tribunal flowing from the leniency agreement. The leniency agreement granted conditional immunity to Clover for certain conduct (surplus removal scheme) but not for other conduct (C quota milk), and appellants were aware they would have to cooperate with the Commission on one complaint while facing prosecution on another. Appellants were represented by experienced legal counsel throughout and voluntarily entered the agreement knowing its consequences.

• Whether a letter from Ms Malherbe constituted a 'complaint' as opposed to 'information' under section 49B(2) of the Competition Act
• Whether leave to appeal should be granted and what test applies (ordinary prospects of success vs special leave)
• Whether the appropriate forum for seeking leave to appeal is the High Court or directly to the Supreme Court of Appeal, given sections 62(1), 62(2), 62(3) and 62(4) of the Competition Act read with the Constitutional Court's judgment in American Natural Soda Ash Corporation v Competition Commission 2005 (6) SA 158 (SCA)
• Whether the Competition Tribunal had jurisdiction to entertain a complaint allegedly not timeously referred to it under section 50(2)
• Whether the consequences flowing from the leniency agreement were fair and whether appellants could resile from the agreement on technical grounds

Application for leave to appeal DISMISSED WITH COSTS, including costs of two counsel.

The ratio decidendi includes: (1) Section 49B(2) of the Competition Act draws a legislative distinction between 'information' submitted to the Commission and a 'complaint' in prescribed form - this distinction must be maintained otherwise part of the section would be redundant. Whether a communication constitutes a complaint or information is primarily a factual determination turning on the intention of the person generating the communication. (2) Parties who voluntarily enter corporate leniency agreements with full legal advice and knowledge of the consequences, including awareness that immunity will apply to certain conduct but not other conduct, are bound by those agreements and cannot later resile from them through technical arguments. The consequences of having to cooperate with the Commission on one matter while facing prosecution on another flow from the voluntary choice to enter the agreement. (3) In determining applications for leave to appeal in competition matters, the court must consider the Act's architecture designed to ensure expedition in resolving competition disputes, and that matters should generally be settled by the Competition Appeal Court as the final court (save for section 62(2) matters and special leave to SCA for section 62(1) matters).

Davis JP made extensive obiter observations: (1) Strong public policy statements about cartel behavior being the most egregious form of anti-competitive conduct, with unanimity across different schools of competition law (Chicago and ordo-liberal) that price-fixing must be rooted out. This is particularly important in South Africa where food prices have risen alarmingly and mal-distribution of wealth continues to blight the nation - such behavior is unconscionable. (2) Criticism of parties attempting to resile from leniency agreements through technical arguments after admitting egregious anti-competitive behavior, stating this should not be countenanced. (3) Broader criticism of the South African legal system where 'all too many cases are run in every single available court on the basis of all manner of conceivable technical arguments that a lawyer can imagine so as to ensure that matters are never brought to finality.' (4) Comments on the role and duties of lawyers: while owing paramount duty to clients, lawyers as officers of the court also owe a duty to the integrity of the legal system. The Court called for debate in the legal profession about balancing client interests with duty to uphold system integrity, without which there can be no rule of law. (5) Emphasis that competition law must be prosecuted with fairness but also with expedition. (6) Comments on the procedural complexities created by the drafters of the Competition Act omitting to consider section 168(3) of the Constitution regarding whether the Supreme Court of Appeal could be excluded from competition matters.

This case is significant for several reasons: (1) It clarifies the distinction between 'complaints' and 'information' under section 49B(2) of the Competition Act, holding that the legislative distinction must be maintained and not every submission of information constitutes a complaint. (2) It addresses the complex procedural question of the appropriate forum and test for leave to appeal in competition matters, following American Natural Soda Ash, distinguishing between matters falling under section 62(1) (requiring special leave directly from SCA) versus section 62(2) (requiring leave from the Competition Appeal Court applying ordinary test). (3) It reinforces the binding nature and sanctity of corporate leniency agreements in competition law, holding parties to agreements voluntarily entered with full legal advice. (4) The judgment contains important obiter dicta about the role of lawyers as officers of the court, the need for expedition in competition matters, and criticism of using technical arguments to delay finality. (5) It emphasizes the public policy imperative of prosecuting cartel behavior expeditiously, particularly in the South African context of food price inflation and wealth inequality. The case reinforces that the Competition Act's architecture was designed to ensure expedition in resolving disputes.