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Competition Commission feels hobbled by court ruling involving Mondi, writes Nandi Mokoena
The Competition Commission believes that its ability to conduct investigations into business operations has been severely restricted.
This comes after a ruling against the commission in the North Gauteng High Court, which reaffirmed that international packaging and paper group Mondi should be allowed access to the documents that led to an investigation by the Competition Commission.
Judge Francis Legodi said: “It really is the end of the road for the commission.”
The decision is just the latest ruling in a series of court cases regarding the commission’s investigation into Mondi’s business practices.
When the commission began an investigation into Mondi in September 2012, the company approached the court for an order to allow it to find out which documents the commission was using to support its investigation.
The commission opposed this request on grounds of confidentiality.
The hearing went through various stages until the Constitutional Court refused in February last year to hear the case, because there were “no reasonable prospects of success”.
But the parties were in court again this year – Mondi because, four years later, it still didn’t have the documents, and the Competition Commission because it felt such a precedent would be the final blow to its work.
Mondi now has to start legal proceedings to carry out the earlier orders and obtain the documents from the commission.
Itumeleng Lesofe, the spokesperson for the commission, said: “The judgment of the Supreme Court is unfortunate and has disappointing implications for competition in South Africa.”
Lesofe said companies would now be able to find out in advance what information the commission had against them at the beginning of an investigation, and they would be able to prepare their defence accordingly.
“Secondly, a business being investigated could use the information to bring in applications for review against the decision of the investigation and thereby delay the process. It would smother competition investigations,” he said.
Lora Rossler, a spokesperson for Mondi, said the company was reflecting on the verdict.
The verdict is just one of the findings in recent years that seems to curtail the powers of the Competition Commission.
The Competition Act contains no restrictions on the commission when an investigation begins. According to the law, the commission need not even notify the complainant or the company that is being investigated that an inquiry has been initiated.
The commission also does not, according to the law, have to make direct contact with the suspect company.
In Mondi’s case, the company became aware of the investigation when its CEO was summoned to provide information to the commission.
Only when the matter is referred to the Competition Tribunal are principles at stake that enable businesses to demand documents that are in the commission’s possession.
Legodi’s judgment – like the previous ones in this case – confirmed that businesses can now insist on this even in the preliminary investigation stage.
In the Woodlands Dairy v Milkwood Dairy case, the court found that the commission must have a “reasonable suspicion” of anticompetitive behaviour before an investigation may be initiated.
