The Constitutional Court rules section 67(1) is a procedural time-bar capable of condonation
Updated: Sep 8, 2020
Authors: Gomolemo Kekesi – Director, Phuti Mashalane – Senior Associate and Disebo Leokaoke – Candidate Attorney
On 24 June 2020, the Constitutional Court (“the Court”) handed down a landmark judgment in the matter between the Competition Commission of South Africa and Pickfords Removals SA (Pty) Limited. The apex court had to make a determination relating to the prescription provision, section 67(1), of the Competition Act 89 of 1998 (as amended) (“the Competition Act”).
This matter emanated from a case concerning alleged malfeasance of collusive tendering in the form of cover pricing or cover quoting, an illegal practice colloquially referred to as ‘bid-rigging’, in the furniture removal industry. A determination had to be made concerning a preliminary question, namely whether section 67(1) constituted an absolute time-bar or a procedural time-bar provision, which in the event of non-compliance, can be condoned in terms of section 58(1)(c)(ii) of the Competition Act. This issue arose pursuant to an exception raised by Pickfords in the proceedings before the Competition Tribunal (“Tribunal”). The Tribunal ruled that it could not invoke its powers of condonation under section 58(1)(c)(ii) of the Competition Act as this power does not apply to section 67(1). When the matter went to the Competition Appeal Court (“CAC”), this court said that the purpose of section 67(1) is to bar, in the public interest, investigations into cartel behavior that has ceased an appreciable time ago and thus no longer endangers the public. The CAC concluded by saying that the language employed in section 67(1) does not lend itself to condonation and that the time-bar in that section is absolute.
The factual matrix of the case is as follows: On 3 November 2010, a complaint was initiated in respect of the furniture removal industry. However, Pickfords was not cited as a respondent in this initiation statement. On 1 June 2011, Pickfords and other furniture removal firms were specifically cited in a further complaint initiation statement concerning the same practices alleged in the 2010 initiation (2011 initiation). Pursuant to further investigations, the 2011 initiation statement was amended on 13 June 2013, alleging a total of 37 instances of collusive tendering by Pickfords. On 11 September 2015, the Competition Commission (“the Commission”), acting in terms of section 50(1) of the Competition Act, referred a section 4(1)(b) prohibited practice complaint to the Tribunal, against Pickfords in respect of the 37 instances of collusive tendering (the complaint referral). The Commission alluded to both the 2010 and 2011 initiation statements in the complaint referral and described the 2011 initiation as an amendment of the 2010 initiation. Pickfords excepted to the complaint referral. It alleged that 20 of the 37 counts of the alleged collusive conduct against it should be dismissed, as 14 of them were time barred in terms of section 67(1) and the remaining six were not sufficiently pleaded.
The dispute before the Court concerned the 14 allegedly time-barred counts. In respect of these, Pickfords argued that it was the 2011 initiation, rather than the 2010 initiation, that was the “trigger event” for the commencement of the running of prescription period. The Commission argued the 2011 initiation was merely an amendment of the 2010 initiation and that the latter was thus the “trigger event”.
In determining whether section 67(1) was an absolute time-bar or a procedural time-bar provision, the Court considered the Commission’s right of access to courts as well as access to a civil court for potential claimants seeking damages arising from a prohibited practice. The Court stipulated that “the Commission’s work as a public body, acting on behalf of the public interest, would be undermined if the section were to be interpreted as imposing an absolute substantive time-bar.”
The Court further stipulated that due to the secretive nature of cartels it would be inequitable to penalise the Commission, which would invariably have no knowledge of said conduct, for its failure to act within the three-year period. That would be tantamount to rewarding cartels for their covert unlawful conduct and would not be in the interests of justice.
Interestingly, the Court concluded by finding that section 67(1) of the Competition Act is a procedural time-bar, capable of condonation and that section 58(1)(c)(ii) includes the power of the Tribunal condoning non-compliance with section 67(1), on “good cause” shown.
Notably, section 67(1) does not make any express or implied provision for the condonation of the period prescribed therein, unlike other provisions of the Competition Act such as section 31(5)(b), which empowers the Chairperson of the Tribunal, in certain instances, to condone a late performance of an act that is subject to a prescribed period in terms of the Competition Act, and section 55(2), which empowers the Tribunal to condone any technical irregularities arising in any of its proceedings. This decision is therefore expected to have significant implications in the investigation and prosecution of prohibited practice matters in light of the fact that the Commission will, from now on, be in a position to seek condonation from the Tribunal, where the conduct in question would have ordinarily prescribed under section 67(1). Although the Court relied on case precedent to suggest that the “good cause” test is well understood and hence should be easy to apply, it will be interesting to see what factors the Tribunal accepts as good causes. It will also be interesting to see how another observation of the Court affects the determination of which date is relevant for section 67(1) being that given that cartels are by their nature secretive, it would be inequitable to penalise the Commission for its failure to act within the 3 year period, and that the emphasis in the provisions relating to the initiation of a complaint is on the prohibited practice concerned, not the names of firms or parties implicated in it (i.e. whether the Commission can rely on an original initiating date for all parties ultimately prosecuted, even though information on the involvement of others only comes to light at a much later date).
See the full judgment here
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