Bounds of tri­bunal’s in­quisi­to­rial pow­ers

Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW - Jo­ce­lyn Katz & Ty­rone Maseko

The dis­tinc­tion is an im­por­tant one as it may af­fect the out­come of le­gal pro­ceed­ings de­pend­ing on which process is adopted

THE Com­pe­ti­tion Act grants in­ves­tiga­tive and ad­ju­dica­tive pow­ers to the Com­pe­ti­tion Com­mis­sion and the Com­pe­ti­tion Tri­bunal re­spec­tively in re­la­tion to anti-com­pet­i­tive be­hav­iour by firms.

The ad­ju­dica­tive process be­fore the tri­bunal is an in­quisi­to­rial one, which means that it can play a part in in­ves­ti­gat­ing the ev­i­dence upon which the mat­ter is ar­gued and de­cided or in in­ves­ti­gat­ing the ul­ti­mate is­sue.

This dif­fers from an ad­ver­sar­ial process where the par­ties de­ter­mine what in­for­ma­tion is to be placed be­fore the court or tri­bunal.

The court or tri­bunal is there­fore limited to con­sid­er­ing only those is­sues that are be­fore it. The dis­tinc­tion is an im­por­tant one as it may af­fect the out­come of le­gal pro­ceed­ings de­pend­ing on which process is adopted.

The ex­tent of the in­quisi­to­rial pow­ers of the tri­bunal is an is­sue that has arisen in a com­plaint re­ferred to the tri­bunal by the com­mis­sion against Sen­wes Limited (Sen­wes) which com­plaint has been con­sid­ered by the tri­bunal, the Com­pe­ti­tion Ap­peal Court, the Supreme Court of Ap­peal and more re­cently the Con­sti­tu­tional Court.

Sen­wes sup­plies silo ca­pac­ity to grain farm­ers and grain traders to en­able them to store grain. It is the dom­i­nant sup­plier of stor­age in its area of op­er­a­tion. Sen­wes is ver­ti­cally in­te­grated as it op­er­ates both in the up­stream grain stor­age sup­ply mar­ket and the down­stream grain trad­ing mar­ket where it com­petes against other grain traders. Sen­wes is ac­cused, among other things, of sup­ply­ing grain stor­age ser­vices to grain farm­ers on a pref­er­en­tial ba­sis to that of­fered to its cus­tomers in the grain trad­ing mar­ket (mar­gin squeeze). Mar­gin squeeze takes place when a firm, par­tic­i­pat­ing in both the up­stream (grain stor­age) and down­stream (grain trad­ing) mar­kets, is dom­i­nant in the up­stream mar­ket, sup­plies an es­sen­tial in­put to its com­peti­tors in the down­stream mar­ket and raises the price of that in­put to a level where the down­stream com­peti­tors can no longer sur­vive in that mar­ket.

The com­mis­sion con­tends that in its com­plaint re­fer­ral to the tri­bunal it al­leged that Sen­wes con­tra­vened a num­ber of sec­tions of the Com­pe­ti­tion Act and that such al­le­ga­tions were suf­fi­cient to cover a case of mar­gin squeeze al­beit that it did not specif­i­cally re­fer to the con­cept of mar­gin squeeze by name. The tri­bunal found that Sen­wes had en­gaged in mar­gin squeeze. Sen­wes took that decision on ap­peal to the Com­pe­ti­tion Ap­peal Court where it ar­gued that mar­gin squeeze had not been pleaded by the com­mis­sion in its com­pli­ant re­fer­ral and that the tri­bunal there­fore had no com­pe­tence to make a find­ing of mar­gin squeeze against it. The Com­pe­ti­tion Ap­peal Court dis­missed the ap­peal. Sen­wes ap­pealed to the Supreme Court of Ap­peal which up­held the ap­peal. The com­mis­sion then pe­ti­tioned the Con­sti­tu­tional Court for a clar­i­fi­ca­tion of the ex­tent of the in­quisi­to­rial pow­ers of the tri­bunal.

The dif­fi­culty in the Sen­wes case is that mar­gin squeeze ap­pears to have been scant­ily al­leged in the com­plaint re­fer­ral. How­ever the is­sue of mar­gin squeeze ap­pears to have been ex­ten­sively can­vassed at the tri­bunal hear­ing although there was some dis­pute be­tween Sen­wes and the com­mis­sion as to whether this as­pect of the com­plaint had been prop­erly pleaded in the com­mis­sion’s com­plaint re­fer­ral. The com­mis­sion, for its part, main­tained that Sen­wes, through­out the course of the com­plaint re­fer­ral, had been no­ti­fied and was aware of the mar­gin squeeze com­plaint against it, but chose to ig­nore it.

The ques­tion that is now be­fore the Con­sti­tu­tional Court, given the di­ver­gent ap­proaches by the tri­bunal and the Com­pe­ti­tion Ap­peal Court, on the one hand, and the Supreme Court of Ap­peal on the other, is the ex­tent of the tri­bunal’s in­quisi­to­rial pow­ers. On the one hand, and in terms of the rules of nat­u­ral jus­tice, a party against whom a com­plaint has been made has the right to know what the com­plaint against it is, to be in a po­si­tion to respond ap­pro­pri­ately to it. On the other hand, an in­quisi­to­rial process im­plies that the tri­bunal is not bound by the or­di­nary rules of ev­i­dence and is also en­ti­tled to de­ter­mine the scope of the dis­pute be­fore it and the rel­e­vant facts for con­sid­er­a­tion, pro­vided that the process it adopts in so do­ing is fair.

The de­ter­mi­na­tion of this ques­tion is of grave im­por­tance for:

the com­mis­sion, as it af­fects the man­ner in which it will have to re­fer and present ev­i­dence in com­plaints be­fore the tri­bunal; and

firms against whom com­plaints of anti-com­pet­i­tive be­hav­iour have been made, as it af­fects the man­ner in which they respond to such com­plaints.

The Con­sti­tu­tional Court has re­served judg­ment in the mat­ter.

Jo­ce­lyn Katz is di­rec­tor and Ty­rone Maseko is se­nior as­so­ci­ate in the com­pe­ti­tion law depart­ment at ENS.

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