IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE HIGH COURT,CAPE TOWN)

In the matter between:

THE COMPETITION COMMISSION OF

JUDGMENT 
Application for Leave to Appeal

This is an application for leave to appeal to the Supreme Court of Appeal against an order of this Court of 13 November 2009, in which the Court upheld a decision of the Tribunal and thus dismissed the appeal, which was prosecuted by the appellant. The appellant has now proceeded to this Court for leave to have the matter heard by the Supreme Court of Appeal.

1.	That the decision of the Tribunal, and subsequently the Court, disregarded in a fundamental way, the requirements of due process, because appellant was 'condemned' on the basis of a case that was not properly pleaded, and further a case, to the prosecution of which appellant repeatedly raised objection.
2.	It was argued that the evidence to support the conclusion that appellant was guilty of a margin squeeze which formed the basis of the decision of both the Tribunal and the Court is so manifestly inadequate that a court, on appeal, would conclude that no case on the facts had been made out against the appellant.

"It is in the interest of justice required that special leave be imposed, for if appeals were allowed without trammel, the expeditious resolution of disputes would be unconscionably delayed and the justified objects of the statute impeded."

At para 19.

Admittedly the word 'margin squeeze' does not appear in section 8 of the Act nor in any other section thereof.   But, as found by this Court, the terms of the Act are widely couched and exclusionary acts are defined in such a manner that it can surely not be contended, on the basis of the reasoning set out in the principle judgment, that a margin squeeze cannot form part of section 8 of the Act.

The question is, whether on the basis of the complaint and these pleadings viewed as a whole, appellant's rights to due process were undermined, because it was not appraised properly of the case which was brought against it.

"A vertical margin squeeze can occur where a firm is dominant in an upstream market and supplies a key input to undertakings that compete with it in a downstream market. In such a situation, the dominant firm has a discretion as to the price it charges for the input, and this could have an effect on the ability of firms to compete with it in the downstream market."

"Senwes abuses its dominance in the handling and storage of grain market by charging in effect lower storage fee to a producer, who agrees to sell the grain stored in Senwes' silos to Senwes. Producers who sell their products to third parties that compete with Senwes downstream, pay a higher fee for the storage of grain. CTH alleges that this practice has made it virtually impossible for it to compete with Senwes in a trading market within the relevant geographical area."

Mr Maphumulo's affidavit includes the following averment:

"Senwes' pricing policy for grain storage is such that it favours or facilitates a situation whereby it would not be financially feasible for a farmer to sell his or her grain to a competitor of Senwes. This practice gives Senwes an unfair advantage over its competitors in the grain trading market. This conduct constitutes an inducement to suppliers and customers not to deal with Senwes' competition. The effect is to impede new firms from entering into the grain trading market or to impede existing firms from expanding within that market."

Furthermore, the following appears in the complaint:

"Senwes' practice of charging differential tariff fees for storage is exclusionary. It has an anticompetitive effect as it impedes or prevents CTH and other grain traders, who would compete with Senwes, from expanding within the downstream market for grain trading and thus is in contravention of section 8(c) of the act."

I return thus to Professor Whish's definition. In the present case, it was found that appellant was dominant in the upstream market. It supplied storage, a key input in the downstream market. The fact that it charged differential prices, which had an effect on the ability of firms to compete with it in a downstream market, is what Professor Whish refers to as a margin squeeze. There is no magic in this term. It is clear, and well known in competition jurisprudence. It may not have appeared in the Act, but that does not mean that it is not part of the Act.  A careful reading of the particular pleadings would have alerted any qualified person in competition law to the fact that, in broad terms, the complaint referred to a margin squeeze.

In short, this is a case where, on a reasonable reading of the complaint and the documentation pursuant thereto, the facts, as alleged, fell squarely within the clear and simple definition of margin squeeze as I have cited it from the leading work of Professor Whish. Were this not to have been the case, were none of these averments to have been contained within the complaint or witness statements, were appellant not to have been advised by such skilled counsel, it may have been an entirely different case and then constitutional arguments may have had application. But they do not have application in this case, because the case must be judged purely and exclusively on the facts of the present dispute as they emerged before this Court.

Further, this is a case where appellant chose to conduct its defence in the manner it did. It now comes before the Court to say, notwithstanding that this is a reasonable reading of the complaint and witness statements viewed within an established jurisprudence of margin squeeze, its rights of due process have been compromised. Were this particular line of argument to be allowed, it would play havoc with the outcome of any case which comes before the Tribunal, because the argument could be that ignorance of the law, or alternatively a risky litigation choice that is, not to have taken a particular cause of action, has now resulted in a conclusion which undermines due process. That can surely not be the conclusion which is justified in terms of the facts.

Once this particular conclusion is reached, the fact that appellant raises a whole range of evidential issues as to what evidence it might have been able to bring in order to show that a margin squeeze did not exist, is irrelevant. There was more than sufficient evidence which was adduced by the respondent as set out in the principal judgment, to justify the conclusion that a margin squeeze existed in this case.

DAVIS, JP