The Competition Commission (Commission) has withdrawn the complaint referral in the so-called milk case, against the remaining respondents being Clover, Parmalat, Nestle and Ladismith Cheese. The withdrawal follows the judgment of the SCA in the milk case during September 2010 that the Commission exercised its duties under the Competition Act unlawfully as regards its powers of inspection and interrogation.

Petra Krusche, director in the Competition and Regulatory Practice at Cliffe Dekker Hofmeyr noted that it had taken the Commission about six months to reach this decision, after specific calls for withdrawal and applications to seek a dismissal of the complaint referral by the respondents.

The SCA's decision was premised on the correct process under the Competition Act, namely that a valid complaint referral must be preceded by a valid complaint investigation. The Commission had initiated a complaint into the milk industry, a matter beyond its jurisdiction under the Competition Act. This initial unlawfulness invalidated all subsequent actions undertaken by the Commission, notably the complaint referral against the milk processors, now withdrawn.

Jurisdictional considerations of a similar kind have recently led to the collapse of other complaint referral proceedings such as the case against Omnia & Yara in the fertilizer collusion case, and the abuse case against SAB.

Said Krusche, "All of these matters (the milk case, as well as the SAB and fertilizer cases) were initiated several years ago, when the Commission's focus had just shifted to prosecuting prohibited practices and well before this part of the application of the Act had been tested.

“It would be surprising if future complaint investigations and subsequent referrals by the Commission will exhibit similar jurisdictional flaws as it is not unduly burdensome to ensure that proper process under the Competition Act is followed.”

She added that it was essential for the rule of law that bodies that have a mandate and duty to promote public interest and welfare, nevertheless act within the statutory and constitutional framework.

Cliffe Dekker Hofmeyr acted for Parmalat and Ladismith

Notes to editors:
Cliffe Dekker Hofmeyr is one of the largest commercial law firms in South Africa with some 115 directors/partners and 250 qualified lawyers located at offices in Johannesburg and Cape Town.

Cliffe Dekker Hofmeyr lawyers specialise in services covering the complete spectrum of business legal needs in 11 core areas of practice. The firm also has dedicated sector-led teams consisting of lawyers with experience in a wide range of industries and the public sector.

Cliffe Dekker Hofmeyr is the South African member firm of DLA Piper Group, an alliance of legal practices, which includes firms with offices around the globe that are affiliated to members of the DLA Piper Practice but are not themselves members of it.

Cliffe Dekker Hofmeyr's Africa practice, in conjunction with DLA Piper Africa Group, is unrivalled in terms of pan-African legal services and geographical coverage.

DLA Piper is an international legal practice with over 3,500 lawyers located in 30 countries and 69 offices throughout Asia, Europe, the Middle East and the US.

Written by Petra Krusche, Director and Regional Practice Head, Competition, Cliffe Dekker Hofmeyr