WHERE A COMPLAINT INITIATION IS AMENDED TO INCLUDE ADDITIONAL FIRMS, DOES THE THREE YEAR LIMITATION APPLY FROM THE DATE OF FIRST INITIATION OR FROM THE DATE OF THE AMENDMENT? COMPETITION COMMISSION V PICKFORDS REMOVALS SA (PTY) LTD (167/CAC/JUL18)

Authors: Lesetja Morapi

1. In Competition Commission v Pickfords Removals SA (Pty) Ltd,¹ the Competition Appeal Court (CAC) dealt with a number of issues including, relevant to this note, the effect of an amendment to a complaint initiation on the application of the statute of limitation prescribed by s67(1) of the Act.

2. The CAC had to determine the effective date of complaint initiation in circumstances where a firm was only expressly identified as a party to a prohibited practice by an amendment to an original complaint initiation which did not expressly name that firm. In particular, the CAC had to decide whether the three year period prescribed by s67(1) should be calculated from the date of cessation of the prohibited practice to the date:

2.1 of the Commissioner’s first initiation for all parties involved in the cartel, including those that were not expressly named in that first initiation; or

2.2 that a party is expressly named in a complaint initiation, particularly where that party is brought into the first complaint initiation by a subsequent amendment.

3. At the time of the Pickfords decision s67(1) provided that “[a] complaint in respect of a prohibited practice may not be initiated more than three years after the practice ceased”. Section 67(1) was amended on 12 July 2019, after the Pickfords judgment toprescribe that “[a] complaint in respect of a prohibited practice that ceased more than three years before the complaint was initiated may not be referred to the Competition Tribunal”.

4. Whether this amendment has any significant practical effects remains to be seen but its most obvious (and indeed intended effect) is to remove a statutory impediment against the initiation and investigation of complaints by the Commission in circumstances where the prohibited practice may have ceased three years prior to the complaint initiation. The Commission will of course still not be able to prosecute firms before the Competition Tribunal in respect of that prohibited practice if the conduct ceased more than three years prior to the complaint initiation by the Commission.

5. Whatever the effect of the amendment in practice, the date of initiation remains important for s67(1) as in either circumstance (pre and post amendment), it is this date and the date of cessation of a prohibited practice that are relevant to whether the participants to that prohibited practice can competently be held to account by the Tribunal. A determination on this issue was also important for the Commission’s decision on the process to be used against a firm whose involvement in a prohibited practice only becomes apparent during an investigation, pursuant to a valid compliant initiation that did not specifically name that party as a party to the prohibited practice. In this respect, it is accepted since the dictum of the Supreme court of Appeal (SCA) in Woodlands that the Commissioner may, “…during the course of a properly initiated investigation, obtain information about other transgressions. If it does, it is fully entitled to use the information so obtained for amending the complaint or the initiation of another complaint and fuller investigation.”²  

6. In Pickfords, van der Linde AJ confirmed that the effective date of a complaint initiation against a firm for purposes of s67(1) is the date on which it is expressly named as a participant to the prohibited practice. This is so irrespective of whether the firm was expressly named by way of a subsequent amendment, or the initiation of a new complaint in respect of that firm.

7. The effect of Pickfords is therefore to confirm that the Commission’s decision as to whether to amend its complaint initiation or initiate anew is irrelevant, at least insofar s67(1) is concerned. This decision is in line with SCA and CAC jurisprudence since Woodlands, in which the SCA set the minimum requirements for a competent complaint initiation. It is apposite at this point to record those minimum requirements as they have been developed and endorsed by the Tribunal and the courts since Woodlands:

7.1 A complaint initiation must be based on reasonable suspicion of a prohibited practice. The Commissioner must therefore be in possession of information which could give rise to a reasonable suspicion of the existence of a prohibited practice – either through a third party complaint or by virtue of information that came to the Commission's knowledge in another way (for example, publication of information by the firms involved the conduct).

7.2 A complaint can only be initiated into the horizontal or vertical practices prohibited by ss 4 and 5, or the abuse of dominance prohibited by s8 of the Act. A complaint cannot be initiated into conduct that the Commissioner believes is anticompetitive but that does not fall within the specific practices prohibited by ss 4, 5 and 8.

7.3 Complaints can only be initiated into prohibited conduct involving a firm or firms. Accordingly, a complaint initiated into prohibited practices must identify at least some of the firms that are alleged to be involved in the prohibited practice as prohibited practices cannot exist absent the conduct of firms.

7.4 A complaint initiation must survive the test of legality and intelligibility. In other words, it must have sufficient particularity to enable the target of the complaint initiation to understand the charges against it and to be able to answer them.

8. Van der Linde AJ’s conclusion is consonant with the CAC’s jurisprudence in other matters that came before it, particularly in respect of the requirements that a complaint must only be initiated against named firms, and contain sufficient particularity to enable those firms to understand the charges levelled against them.

8.1 in Loungefoam,³ Wallis J overturned the Tribunal’s finding which allowed the Commission to amend its complaint referral to include Feltex Holdings Limited to a price fixing conspiracy. The CAC held, following Woodlands, that because the complaint initiation did not refer to Feltex as a party to any price fixing conspiracy, a price fixing complaint was not initiated against Feltex. The Commission was therefore not allowed to require Feltex to answer a price fixing case for the first time before the Tribunal, without having initiated a complaint against Feltex for that conspiracy.

8.2 in Power Construction,⁴ Davis J found that the appellants in that case had been added to a complaint that was first initiated in September 2009, by a subsequent amendment which, at the latest took place in November 2011 when the Commission expressly informed the appellants that it had become aware of their involvement in a bid-rigging conspiracy. The initial complaint was initiated against 19 named respondents in the construction industry and “other firms including joint ventures in the construction industry” but did not expressly name the appellants. Having found that the appellants were added by amendment in November 2011, Davis J then had to determine “…whether the prohibited practice ceased three years prior to November 2011, at the latest…” ⁵(own emphasis) for purposes of s67(1). On the evidence before him, Davis J found that the prohibited practice had not ceased within three years before November 2011. The statute of limitation therefore did not apply to the appellants’ conduct.

9. It appears therefore that even before Pickfords, the CAC was already minded to reach the conclusion that a complaint against a firm is not initiated until such time as it is expressly named in the complaint initiation, whether by amendment or initiation de novo.

¹ Pickfords (167/CAC/Jul10).
² Woodlands Dairy (Pty) Ltd & Another v Competition Commission 2010 (6) SA 108(SCA) para 55.
³ Loungefoam (Pty) Ltd & Others v Competition Commission & Others, Feltex Holdings (Pty) Ltd v Competition Commission & Others (102/CAC/Jun10) (6 May 2011).
⁴ Power Construction (West Cape) & Another v Competition Commission (145/CAC/Sep16) (2 May 2017).
⁵ Ibid para 41.

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