Bounds of tribunal’s inquisitorial powers
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.