Glaxo Wellcome (Pty) Limited and Others v National Association of Pharmaceutical Wholesalers and Others

The complainants are pharmaceutical wholesalers and distributors. The first to seventh respondents (appellants) are manufacturers of pharmaceutical products. The parties were in a vertical relationship where complainants procured products from the respondents for distribution as wholesalers. Previously, respondents sold products to wholesalers like the complainants at a standard discount of 17.5% off list prices. The respondents converted the 8th respondent, Druggist Distributors (DD), from a wholesaler into a distribution agent and stopped offering the complainants the 17.5% discount. The complainants lodged a complaint with the Competition Commission on 7 June 2000 alleging conduct prohibited by sections 4, 5, 8 and 9 of the Competition Act No 89 of 1998. The Commission investigated but filed its referral outside the statutory period, resulting in a deemed certificate of non-referral. On 19 June 2001, the complainants directly referred the complaint to the Competition Tribunal under section 51(1). The respondents applied to strike out various paragraphs and prayers from the complaint referral, arguing the Tribunal lacked jurisdiction over conduct not alleged in the original complaint to the Commission, specifically: denial of access to an essential facility, charging excessive prices, and predatory pricing.

• Whether the Competition Tribunal has jurisdiction to consider allegations of prohibited conduct in a complaint referral that were not included in the original complaint submitted to the Competition Commission
• Whether the complaint procedures in Part C of the Competition Act require particulars of conduct alleged in a referral to have been submitted to the Commission as a jurisdictional prerequisite
• Whether a refusal to supply goods to competitors constitutes a denial of access to an 'essential facility' under section 8(b) of the Competition Act
• Whether pharmaceutical products protected by patents and licenses can qualify as 'essential facilities' or 'resources' within the meaning of section 8(b) read with section 1(viii) of the Act
• Whether the Tribunal was correct to hear an application to strike out before the respondents filed their answering affidavit

1. The appeal is upheld and the decision of the Tribunal is amended to grant Prayer 1.1 of the respondents' notice of motion (striking out prayer 3 and 7(b) of the complaint referral relating to denial of access to essential facilities). 2. The complainants are ordered to pay the costs of the appeal including the costs of two counsel. 3. The cross-appeal is dismissed with costs including the cost of two counsel.

The binding legal principles established are: (1) The submission of particulars of a complaint to the Competition Commission is a jurisdictional fact that must be satisfied before the Competition Tribunal can exercise its powers - a complainant cannot in a referral add allegations of conduct not complained of to the Commission; (2) Section 51(1) of the Competition Act allows a complainant to refer 'the complaint' to the Tribunal, meaning the conduct that was the subject of the complaint under section 49B, not any new complaint; (3) An 'essential facility' under section 8(b) read with section 1(viii) means 'an infrastructure or resource that cannot reasonably be duplicated' and does not include products, goods or services, even if protected by patents or licenses; (4) A refusal to supply products to competitors is governed by section 8(d)(ii) (refusal to supply scarce goods), not section 8(b) (essential facilities), and these are distinct prohibitions with different legal consequences; (5) The essential facilities doctrine under section 8(b) is a per se prohibition separate and distinct from exclusionary acts under section 8(d) which allow for pro-competitive defenses.

The court made several obiter observations: (1) The Competition Commission's failure to file the referral on time due to 'administrative errors' was a prima facie failure of its statutory duty, and the Commission should institute procedures to avoid such lapses; (2) The essential facilities doctrine must be applied with caution, as demanding that a dominant firm grant access to its facilities is a substantial intervention that can have harmful economic effects, such as discouraging investment in infrastructure; (3) The court commented on the complaint procedures being designed to avoid overly technical or formalistic requirements, with section 49B not being prescriptive about how complaints may be initiated; (4) While unnecessary to fully define the ambit of section 8(b), the court outlined five elements that would need to be averred to allege a contravention: (a) refusal to give access to infrastructure/resource, (b) parties are competitors, (c) infrastructure/resource cannot reasonably be duplicated, (d) complainant cannot reasonably provide goods/services without access, (e) it is economically feasible to provide access; (5) The court noted that widening the application of the essential facilities doctrine well beyond legislative intent can have harmful economic effects.

This case is significant in South African competition law for: (1) Establishing strict jurisdictional requirements for complaint referrals to the Competition Tribunal - conduct alleged in a referral must have been substantially alleged in the original complaint to the Competition Commission; (2) Providing authoritative interpretation of the essential facilities doctrine under section 8(b) of the Competition Act, clarifying that it applies to infrastructure or resources that cannot be reasonably duplicated, not to products or goods (even those protected by intellectual property rights); (3) Distinguishing between essential facilities (section 8(b) - per se prohibition) and refusal to supply scarce goods (section 8(d)(ii) - subject to efficiency defenses); (4) Affirming the central role of the Competition Commission as the 'plaintiff of first choice' in the competition law enforcement framework; (5) Clarifying that the Tribunal's wide inquisitorial powers cannot be used to circumvent clearly defined complaint procedures; (6) Providing guidance on when striking out applications may be heard by the Tribunal. The judgment emphasizes that the essential facilities doctrine must be applied with caution and cannot be broadly interpreted to discourage investment in infrastructure.