Interim awards in South African competition cases on the rise

Mark Thomas of Pinsent Masons said the trend is likely to be welcomed by businesses that raise complaints rooted in South African competition law to the competition authorities about rivals’ alleged prohibited commercial practices.

The Competition Tribunal, along with the Competition Commission, has the power to enforce South Africa’s Competition Act. One of the powers of the Tribunal, under the Act, is the power to grant an interdict – an order or injunction – against a firm in respect of a ‘prohibited practice’. The Act lists prohibited practices associated with anti-competitive agreements and abuse of a dominant market position.

Section 49C of the Act, which took effect in 2001, provides the Tribunal with powers to issue interim interdicts for the purposes of awarding interim relief, and it also sets out the conditions under which interim relief can be granted by the Tribunal – it must determine that it is ‘reasonable and just’ to make such an award and, in making that determination, have regard to a series of factors. Those factors include: the evidence of the alleged prohibited practice; the need to prevent serious or irreparable damage to the applicant; and where the balance of convenience lies.

It is not necessary for all three factors to weigh in favour of the applicant for an application for interim relief to be granted – the Tribunal takes a holistic view. Even if all factors weigh in favour of the applicant, the Tribunal retains its discretion and can refuse to grant interim relief where it is reasonable and just to do so.

To be eligible for an award of interim relief, a complainant must first lodge a complaint with the Competition Commission before making an application for interim relief. The application for interim relief must also be made expeditiously and in circumstances where the complainant cannot wait for the Commission to finalise its investigation – the application is at risk of being rejected if the applicant takes too long to make the application.

In its handbook of case law 2020-21, which provides a guide to select cases decided by the Competition Tribunal between 1999 and 2021, the Tribunal highlighted that it had been “very reticent to grant interim relief where there is insufficient proof of a prohibited practice and has dismissed applications for interim relief in such circumstances”. However, since that publication, the Tribunal has granted interim relief in a number of cases.

In one recent case, media company eMedia Investments (Pty) Ltd was granted interim relief in the case of a complaint raised against media platform provider MultiChoice (Pty) Ltd. On 15 April the Tribunal ordered that MultiChoice, including its subsidiary SuperSport, and the South African Broadcasting Corporation are prohibited from implementing and enforcing any restrictions in the existing sub-licensing agreements they have entered into.

Another case in which the Tribunal has granted interim relief includes one involving a complaint raised by Sekunjalo Group against nine banks. Sekunjalo has complained that, in terminating their relationships and/or refusing to provide banking and payment services to it, the banks are responsible for abusing a dominant market position and/or collusive conduct, in breach of South African competition law.

The Tribunal found that the harm or prejudice that the Sekunjalo Group will suffer if interim relief is not granted is greater than the prejudice which the banks will suffer if the interim relief is granted. Therefore, it considered that the balance of convenience favours the Sekunjalo Group and that it was reasonable and just to grant it interim relief – which was that the banks were ordered to reopen certain accounts or prevented from closing certain accounts.

Interim relief was also granted in a case brought by Makarenge Electrical Industries (Pty) Ltd, trading as Wilec, against Allbro (Pty) Ltd. Makarenge claims Allbro is engaging in anti-competitive conduct in the market for the provision of transformer bushings and sought an order from the Tribunal to prevent Allbro from inducing customers not to deal with Wilec’s customers.

The Tribunal concluded that Wilec had, for the purposes of its application, sufficiently demonstrated that Allbro’s conduct had anti-competitive effects that were not justified by technological, efficiency or pro-competitive gains. It weighed the prejudice that Wilec would suffer if the interim interdict were not granted against the prejudice to Allbro if it were granted and concluded that it could not conceive of any real prejudice that Allbro would suffer during the period of the order, pending the outcome of the Commission’s investigation.

Thomas said: “The rise 49C interim orders is good news for complainants as they can obtain some immediate interim relief from an alleged prohibited practice.”

In recent years, the Tribunal has also dismissed applications for interim relief – including in a case between Nothemba Mlonzi and Eskom, and a case between Apollo Studios and Motomatix.

Thomas said: “Respondents opposing applications for interim relief have the benefit of well-established precedent from other courts that they can refer to when opposing such an application.”

The position in the EU is quite different to the developments that have been noted in South Africa – the European Commission has imposed interim measures once in 20 years, but this may change as the European Commission is reviewing the effectiveness of existing regulations which could prompt a push to bolster the use of interim measures in the future. Such measures are also fairly rare in the UK, with the exception of two recent instances in the airline sector occurring in the context of the Covid-19 pandemic.