The Supreme Court of Appeal (SCA) recently did away with a strict interpretation of the rule that a referral of a complaint by the Competition Commission to the Competition Tribunal must correspond with and may not go wider than, the complaint originally submitted by a complainant or initiated by the Commission, known as the Referral Rule.

Nutri-Flo CC and Nutri-Fertilizer collectively lodged a complaint (Nutri-Flo Complaint) with the Commission in October 2003 against Sasol Chemical Industries (Sasol) in respect of price increases for certain raw materials. More specifically, the complainants alleged that Sasol abused its dominance in contravention of sections 8(a), 8(c) and 9(1)(c) of the Competition Act by engaging in exclusionary pricing, excessive pricing and discriminatory pricing. In support of their allegations the complainants attached an affidavit to their complaint in terms of which they explained the price increases with reference to a cartel Sasol had allegedly formed with Yara South Africa (Pty) Ltd (Yara) and Omnia Fertilizer Ltd (Omnia). It should be noted, however, that the Nutri-Flo Complaint was lodged against Sasol and not against Yara and/or Omnia.

On 4 May 2005, the Commission referred the Nutri-Flo Complaint to the Competition Tribunal and both Yara and Omnia were cited as respondents together with Sasol, even though the Nutri-Flo Complaint was lodged exclusively against Sasol. In particular, the referral contained a complaint that alleged that Sasol, Yara and Omnia engaged in cartel conduct in contravention of sections 4(1)(a) and 4(1)(b) of the Competition Act. The complaints in the referral to the Tribunal thus went further than the Nutri-Flo Compliant which only dealt with sections 8 and 9. Following the referral to the Tribunal, Sasol concluded a settlement agreement with the Commission in terms of which Sasol admitted that it had contravened section 4(1)(b) in that Sasol had entered into a cartel with Yara and Omnia in terms of which they, inter alia, engaged in price-fixing activities. Sasol also undertook to provide the Commission with information regarding the cartel between itself, Yara and Omnia. Omnia opposed the referral and contended that the referral ought to be set aside on the basis that it extended beyond the Nutri-Flo Complaint, i.e. Omnia alleged that the referral to the Tribunal breached the Referral Rule. The matter was ultimately heard by the Competition Appeal Court (CAC) who found in favour of Omnia. The Commission subsequently appealed to the SCA which resulted in the present case, being the case of The Competition Commission v Yara and Others [2013] ZASCA 107.

The CAC followed a strict interpretation of the Referral Rule by stating that:

• where a complainant intended to complain about the conduct of party A, the subsequent referral could not include Party B, unless, the Commission had separately initiated a complaint against Party B; and
• there must be symmetry between the complaint as initiated and the referral to the Tribunal.

The SCA disagreed with the reasoning and finding of the CAC and held that the complainant’s intention was only relevant to determine whether the complainant had intended to submit information to the Commission or whether the complainant intended to submit a complaint to the Commission. The SCA ultimately held that "once it is determined that what was submitted was indeed intended to be a complaint, it makes no difference at whom the complaint was aimed. If what was submitted amounts to a complaint that A and B were involved in an agreement of price fixing, or in a concerted practice of collusive tendering, it makes no difference that the complainant’s quarrel was only with A and not B. Ordinary language dictates that it also constitutes a complaint of a prohibited practice against B". The SCA thus overturned the decision of the CAC by finding it of no consequence that the Nutri-Flo Complaint was aimed exclusively at Sasol and not at Omnia as well.

The SCA did, however, agree with the CAC that the ambit of the Commission's referral to the Tribunal was wider than that of the Nutri-Flo Complaint. In doing so, the SCA distinguished between a complaint submitted by a private individual and a complaint initiated by the Commission. In this regard, the SCA held that complaints initiated by private persons have to be submitted in the prescribed form, whereas complaints initiated by the Commission require no more than an informal or tacit decision to open a case. Accordingly, once it is appreciated that an initiation by the Commission demands no more than an informal or even tacit decision, it becomes apparent that an enquiry into whether or not the Commission can introduce a new complaint is inappropriate. All the Commission has to do is to decide to initiate a new complaint, to investigate that complaint and, if appropriate, refer that complaint to the Tribunal. The SCA found that to demand that such referral correspond with the contents of the complaint simply makes no sense if the complaint consists of nothing more than an informal decision to investigate. The SCA thus rejected the CAC's strict interpretation of the Referral Rule.

The SCA, however, held that the Commission is still required to undertake the juristic act of initiating a complaint, an act without which any referral would fall outside the ambit of the Competition Act. Where the referral contains a complaint not covered by the complaint submitted by a complainant, the SCA held that the enquiry will be whether the additional complaint had, as a matter of fact, been initiated by the Commission whether it be expressly or tacitly.

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