CONSTITUTIONAL COURT WEAKENS THE STATUTE OF LIMITATION AGAINST THE PROSECTUTION OF A PROHIBITED PRACTICE MORE THAN THREE YEARS AFTER IT HAS CEASED

Author: Lesetja Morapi

1. On 24 June 2020, the Constitutional Court (“Court”) issued its decision in the Competition Commission’s appeal from the Competition Appeal Court (“CAC”) in Competition Commission v Pickfords Removals SA (Pty) Ltd (CCT123/19) [2020] ZACC 14. The judgment dealt with:

1.1 the effective date of complaint initiation into a prohibited practice in circumstances where a firm was only expressly identified as a party to the prohibited practice by an amendment to an original complaint initiation which did not expressly name that firm;

1.2 whether s67(1) of the Competition Act, 1998 provides an absolute time-bar against the initiation of a complaint in respect of prohibited conduct by the Commission more than 3 years after the cessation of the prohibited practice, or if it is merely a procedural time-bar capable of condonation; and

1.3 if s67(1) only provides a procedural time-bar, whether s58(1)(c) of the Competition Act provides the Competition Tribunal (“Tribunal”) with the statutory power to condone non-compliance with s67(1).

2. At the time of the commencement of the proceedings before the Competition Tribunal, s67(1) read “A complaint in respect of a prohibited practice may not be initiated more than three years after the practice has ceased.” The CAC had held that that the effective date of a complaint initiation against a firm for purposes of s67(1) is the date on which the firm is expressly named as a participant to the prohibited practice, 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. The CAC also held that the s67(1) time bar was absolute and incapable of condonation.
3. The Constitutional Court disagreed with the CAC on all grounds and upheld the Commission’s appeal in a judgment that will no doubt have far-reaching effects for prohibited practice litigation in South Africa.
4. Insofar as the first of the above issues is concerned, the Court departed from the CAC’s jurisprudence on the issue and held that the effective date of a complaint initiation against a firm for purposes of s67(1) is the date that a complaint is initiated into a prohibited practice. If the Commission initiates a complaint against a prohibited practice and identifies some of the firms that are engaged in that practice, but later identifies additional firms, the complaint will be deemed to have been initiated against those additional firms on the dated of the original initiation and not when their role becomes apparent. It must be noted that the Court’s finding in this respect relied heavily on the specific facts and the wording of the original and subsequent complaint initiation documents. That being said, the judgment is wide enough to suggest that the principle might be universally applied.
5. The Court similarly departed from the long-standing understanding of the time bar against the initiation of complaints in respect of prohibited practices whose effects have ceased more than three years before the complaint initiation as an absolute time bar incapable of condonation. In the Court’s view, an interpretation of the s67(1) limitation as an absolute time bar would drastically undermine the Commission’s right of access to the Tribunal in favour of cartels, and the right of would-be follow-on civil damages claimants to the courts, which is entrenched in the Constitutional Bill of Rights.
6. Having held that s67(1) only provides a procedural time bar, the Court then held that s58(1)(c) gives the Tribunal the power to condone, on good cause shown, any non-compliance with the rules of the Commission or the Tribunal and of any time limit set out in the Competition Act. The Court saw no reason why this power should not extend to compliance with the s67(1) time limits if there is good cause for such condonation, and it is in the interests of justice to condone the non-compliance.
7. The upshot of the Court’s judgment therefore, is the following:

7.1 if a complaint is initiated against conduct involving certain named firms, and the Commission later discovers the involvement of additional firms which are then added by way of an amendment to the complaint, the relevant date of initiation for purposes of s67(1) for those additional firms can be taken to be the date of the original complaint (at least on similar facts to those in Pickfords).

7.2 even if the Commission is unable to show on the facts that it initiated a valid complaint against a prohibited practice within three years of the cessation of its effects, it will no longer automatically be barred from prosecuting the firms engaged in that prohibited practice, but can do so with leave from the Tribunal on good cause shown and if the interests of justice demand it so.

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