Wiseman Khuzwayo

The Competition Commission could not amend a complaint referral about alleged collusion by a chemical cartel to the commission to include firms against whom the complaint was not initiated, the Constitutional Court heard yesterday.

The Competition Appeal Court (CAC) in June last year overturned a decision of the Competition Tribunal which allowed the commission to amend its complaints referral against manufacturers and sellers of flexible polyurethane foam, namely Loungefoam, GommaGomma, Vitafoam, Steinhoff Africa, Steinhoff International, Feltex and Kap International.

They are alleged to have colluded in setting prices for the chemicals for the production of the foam that is used in the manufacture of furniture and automotive finishes and in industrial applications.

The commission initiated three separate complaints, and following an investigation, submitted a referral to the tribunal for anti-competitive conduct.

There was no complaint against Steinhoff Africa in the referral. The tribunal later granted the commission’s application to include Steinhoff Africa and to expand the charges against Steinhoff International, Feltex and Kap.

The CAC overturned this decision. The commission has applied to the Constitutional Court for leave to appeal against the CAC judgment on the basis that the issue requires clarity and certainty and involves constitutional matters.

The Competition Act requires parties to seek leave to appeal from the CAC rather than from the Constitutional Court. Senior advocate Hamilton Manenje argued that it was appropriate under the act to modify a referral as the commission did.

The commission says, in its view, the act must be interpreted broadly and inclusively, as it neither defines the term “complaint” nor requires that all the parties believed to be implicated and all prohibited practices be mentioned. The act also allows the commission to add particulars to its referral and therefore claims that were not in the original complaint may be included in the referral.

Steinhoff and Feltex argue that the referral must be confined to the facts and allegations in the original complaint and the parties mentioned in it.

Advocate David Unterhalter, SC, said the CAC judgment had nothing to do with constitutional issues and raised no constitutional question.

He argued that it was inappropriate for the commission in its application to amend the complaint to include Steinhoff.

He said Steinhoff International, Steinhoff Africa and Loungefoam were an economic unit and therefore could not have colluded with each other.

“This is a new argument and should not be entertained. The act does not attribute an administrative penalty on the parent company,” he said.

Unterhalter also denied that Loungefoam was part of the chemical cartel.

Feltex entered into an agreement with Loungefoam in terms of which Feltex sold its foam manufacturing division for the bedding and furniture industry to Loungefoam.

In terms of the deal, Feltex retained its foam manufacturing business for automotives and industrial applications.

The agreement restrained Feltex from conducting business which would be in competition with the division sold to Loungefoam, which in turn could not compete with Feltex.