The Commissioner of the Competition Commission v The General Council of the Bar South Africa and Others

The eleven respondents were associations of advocates practicing in various divisions of the High Court. The first respondent, the General Council of the Bar of South Africa (GCB), maintained a code of conduct for all associations. Suspecting that some of their rules might violate section 4 of the Competition Act 89 of 1998, the respondents submitted a joint application to the Competition Commission for exemption from Part A of Chapter 2 of the Act. The Commission's decision approximately one year later was ambiguous - it purported to grant exemption subject to "conditions" but the conditions in fact constituted refusal to exempt several important rules. The respondents obtained a document (a "draft response") from the Ministry of Justice that had not been disclosed to them, containing adverse comments on their application. They brought review proceedings in the Transvaal High Court. The Commission conceded its decision had to be set aside for non-compliance with the audi alteram partem principle. The main dispute became whether the matter should be remitted to the Commission or decided by the court. Roos J decided against remittal and exempted some rules. The Commission appealed and the respondents cross-appealed.

• Whether the Competition Commission properly applied the criteria in Schedule 1 of the Competition Act for exempting professional association rules
• Whether the Commission's failure to disclose the Minister's comments to the respondents before making a decision constituted procedural unfairness
• Whether the matter should be remitted to the Commission for reconsideration or decided by the reviewing court
• Whether the referral rule (requiring advocates to accept briefs only from attorneys) should be exempted from the Competition Act
• Whether other professional conduct rules of the Bar should be exempted from competition law

The appeal was upheld in part. The cross-appeal was dismissed. The order of the Court a quo was set aside and replaced with: (a) The Commission's decision was set aside; (b) The referral rules prohibiting advocates from accepting briefs from persons other than attorneys were exempted from Part A of Chapter 2 of the Competition Act; (c) Subject to the exemption of the referral rule, the application for exemption was remitted to the Commission for reconsideration; (d) The Commission was ordered to pay the applicants' costs in the court a quo including costs of two counsel. Each party was directed to pay its own costs of the appeal and cross-appeal.

The binding legal principles established are: (1) Schedule 1 of the Competition Act requires a two-stage enquiry: first, whether professional association rules contain restrictions substantially preventing or lessening competition; second, if so, whether having regard to internationally applied norms, such restrictions are reasonably required to maintain professional standards or the ordinary function of the profession; (2) The Competition Commission cannot use its exemption powers to effectively alter or "bend" common law principles - the power to develop common law vests exclusively in courts under section 39(2) of the Constitution; (3) The referral rule (requiring advocates to accept briefs only from attorneys) must be exempted from competition law because it reflects established South African common law recognizing a divided legal profession; (4) When deciding whether to remit a matter to an administrative authority or substitute its own decision, a reviewing court must consider: (a) fairness to both parties, (b) whether the court is competent to make the substantive decision on available evidence, and (c) the likelihood of the matter receiving proper treatment if remitted; (5) Administrative incompetence or failure to observe natural justice principles does not by itself establish bias - an inference of bias requires more than inexperience or oversight.

Hefer AP made several important obiter observations: (1) He noted that administrative bodies perform their functions with varying degrees of competence, and failures to observe natural justice often stem from lack of expertise or inexperience rather than bias - "it will be a sad day if, whenever this occurs, the body can be accused or suspected of bias"; (2) He observed that while judges have knowledge and experience qualifying them to form views on practical necessity of some professional rules, "in the context of the Competition Act, this type of reasoning cannot be taken too far" - the Commission must judge reasonableness considering a range of economic and social factors; (3) He suggested that the enquiry under item 1(b) requires a balancing exercise weighing benefits of a restriction against the harm it may cause, not only to profession members but to others as well; (4) He noted that the mere fact a court considers itself as qualified as the administrator does not justify usurping the administrator's powers - "sometimes, however, fairness to the applicant may demand that the court should take such a view"; (5) He commented that at the time, a policy unit in the Ministry of Justice was preparing legislation to transform the entire legal profession, and the Minister's comments on the Bar's rules were made in this wider transformation context rather than the narrower Schedule 1(b) enquiry.

This case is significant in South African competition and administrative law for several reasons: (1) It clarified the proper approach to applications for exemption of professional association rules under Schedule 1 of the Competition Act, establishing the two-stage enquiry required; (2) It confirmed that the Competition Commission's function under Schedule 1(b) requires a balancing exercise between the anti-competitive effects of a rule and its benefits for maintaining professional standards, having regard to international norms; (3) It held that the Commission cannot use competition law to effectively change common law rules - the power to develop common law vests in courts, not administrative bodies; (4) It established that while reviewing courts have discretion whether to remit or substitute their own decision, this must be exercised based on fairness to both parties and the court's competence to make the substantive decision; (5) It affirmed that the divided legal profession and referral system are part of South African common law and protected from competition law challenge absent judicial development of the common law; (6) It distinguished between administrative incompetence/lack of understanding and bias - not every procedural irregularity justifies an inference of bias.