Johannesburg - The Competition Commission was accused of ambushing Distribution and Warehousing Network (Dawn) with new evidence during a Competition Tribunal hearing about alleged market division by the listed manufacturer and distributor of local plumbing and hardware brands and Sangio Pipes.
The hearing on Friday followed the commission discovering that Dawn and Sangio had allegedly entered into an agreement in contravention of the Competition Act to divide markets and agreed not to compete by allocating solid wall or regular high quality large diameter piping to Sangio and corrugated high quality large diameter piping to Dawn and its subsidiaries.
The agreement was allegedly sanctioned through a shareholder agreement between Dawn and Sangio signed in April 2007. The alleged contravention was discovered by the commission in 2014 when it was asked to approve a merger between Dawn and Sangio.
Dawn had at that stage already acquired shares in Sangio, but failed to notify the commission about the transaction.
Objected
David Unterhalter, the counsel for the respondents, objected on Friday to the commission’s use as evidence of a competitiveness report compiled by Dawn and Sangio for the merger proceedings at the commission.
He said it was agreed at a pre-hearing that the matter would be decided on the affidavits of the parties.
“Ambush is not the way in which litigation is conducted. What is aggravating about this circumstance is that there is no question about what the (tribunal) order means,” he said.
Unterhalter claimed the commission was trying to enter information from the competitiveness report into evidence through its heads of argument and called its conduct extraordinary, impermissible and neither fair nor proper.
Tembeka Ngcukaitobi, the counsel for the commission, said they did not want to “sneak” in the report but wanted to rely on it and be transparent about it.
Ngcukaitobi said the report was a central part of the commission’s case and the facts in the report should be common cause because they were the facts pleaded and alleged by the respondents for their merger.
“In so far as these are the respondents own documents, there could certainly be no prejudice in the commission relying on these documents... Nothing precludes the tribunal from considering a report that comes from the merging parties themselves to the commission in making its assessment.
“You have the power to do it in terms of the act and under the rules,” he said.
Ngcukaitobi disputed that the pre-hearing agreement prevented the commission from using the report and said the respondents could not advance one case in relation to a merger filing but abandon that when it was being prosecuted and seek to give the report “a different flavour”.
Yasmin Carrim, the chairwoman of the tribunal panel hearing the case, said it had decided to grant the commission’s application to admit the competitiveness report.
Carrim said to avoid any prejudice to the respondents, the tribunal would give them an opportunity to request a postponement and consider their position and file a supplementary affidavit and any factual evidence.
The case was postponed.
BUSINESS REPORT