WORLD TRADE
ORGANIZATIONWT/WGTCP/W/220
5 November 2002
(02-6084)
Working Group on the Interaction
between Trade and Competition PolicyOriginal:  English
COMMUNICATION FROM SOUTH AFRICA
The following is the final text of a paper received from the Permanent Mission of South
Africa which was circulated as an advance copy for the Working Group's meeting on
26-27 September 2002.
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HOW THE PRINCIPLES OF TRANSPARENCY, NON-DISCRIMINATION
AND PROCEDURAL FAIRNESS ARE REFLECTED
IN SOUTH AFRICAN COMPETITION LAW
I. INTRODUCTION AND SUMMARY
This document outlines how the principles of transparency, non-discrimination and
procedural fairness are reflected in South African competition law.  The South African Constitution
and related legislation require that the principles of transparency, non-discrimination and procedural
fairness be reflected in all administrative practice.  In order to pass the test of constitutionality, the
Competition Act and the practices of the authorities must accord with these core constitutionalprinciples.  The Competition Act does require that regard be had to the promotion of small and
medium-sized enterprises and to support for securing a more equitable and less racially skewed spread
of ownership.  This may be construed as a form of positive discrimination in favour of small and
medium-sized enterprise and firms owned by people historically disadvantaged by the system of
apartheid.  However, this is compatible with the Constitution which explicitly provides that equalitybefore the law includes laws or activities that have as their object the amelioration of the conditions of
the disadvantaged, including those disadvantaged on the grounds of race, colour or gender.
II. SUPREMACY OF THE CONSTITUTION
Section 2  of the Constitution of the Republic of South Africa states that the constitution is the
supreme law of the Republic;  law or conduct inconsistent with it is invalid and the obligations
imposed by it must be fulfilled.  Its application to juristic persons (corporations and companies) is
expressly stated in Section 8 .  Clearly then, the Competition Act ("the Act") and the enforcement
thereof must ultimately pass the test of constitutionality.
Not only does the Constitution protect the bare dominion of the principles of transparency,
non-discrimination and procedural fairness, in some instances it also provides for the adoption of
specific legislation to provide weight and clear direction to ensure protection of these principles.WT/WGTCP/W/220
Page 2
As public bodies the competition authorities must ensure that no action or decision in
pursuance of competition law and policy infringes upon the fundamental principles of the Constitution
and that the rights protected by the Constitution are given effect to in so far as these are relevant to the
pursuit of competition policy.  While there are specific provisions in the Act, which give express
effect to these principles, they are in fact a tacit or implicit part of all administrative provisions or theAct and must be adhered to in all proceedings.
It is worth noting too, that given South Africa's peculiar history - riddled with the very
antithesis of transparency, non-discrimination and procedural fairness - it is not surprising that South
Africans, in general, are particularly vigilant in their insistence upon adherence to these principles by
both public and private bodies.
III. TRANSPARENCY
(a) South Africa's effort to create a constitutional democracy based on the principles of
openness and transparency permeates the Constitution.  Essentially these principles
translate into enabling meaningful participation and ensuring that all public bodies are
accountable to the governed.
(b) In respect of competition law, the traditional concept of a separation of powers
between the relevant government department  (the Department of Trade and Industry)
and the competition authorities and between the respective competition bodies
themselves, is most notable.  The Act specifically provides the Competition
Commission with investigative powers, the Tribunal with adjudicative and decision
making powers and the Competition Appeal  Court with the power to review or
overturn decisions of both the Commission and the Tribunal.  The authorities are
therefore independent of each other and of government and operate as such.
Section 20 of the Act specifically provides that the Competition Commission is
independent and subject only to the Constitution and the law.  This provision alsoapplies to the Tribunal whist the Court's independence is guaranteed by the
Constitution.
Accountability
Section 33(2) of the Constitution states that anyone whose rights have been adversely
affected by administrative action has the right to be provided with reasons in writing for the decision.
Section 16(4) of the Competition Act provides that  the Tribunal must publish its decisions
regarding merger activity in the Government Gazette and must issue reasons for any such decision.
Unlike the practice in many other jurisdictions, the Competition Tribunal must give reasons even
where the decision is to approve a merger.  It is clear than that the Act goes beyond the demands of
the Constitution and ensures that parties are given reasons for all decisions, irrespective of whether
their rights have been adversely affected or not.   Similar provisions apply to complaints of anti-
competitive behaviour.
Public hearings
Section 34  of the Constitution provides for any dispute to be resolved in a fair public hearing
by an independent and impartial tribunal or forum.
In keeping with this, all hearings of the Tribunal are open to public, except where protection
of confidentiality is of the essence.  In addition, Rule 57  of the Tribunal Rules requires that records of
all hearings be kept, including transcripts of oral evidence.WT/WGTCP/W/220
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Access to information
Section 32  of Constitution deals with the right of access to information:  (1) Everyone has the
right of access to:
(a) any information held by the state;  and
(b) any information that is held by another person and that is required for the exercise or
protection of any rights.
In addition, legislation to give effect to this right has been  enacted.  The Promotion of
Access to Information Act 2 of 2000 ("AIA") provides for access to records held by public and
private bodies, sets out grounds for non-disclosure and the manner in which such grounds may be
overruled by the public interest and provides mechanisms for dispute resolution.  Section 5 of the AIAstates that the AIA applies to the exclusion of any other legislative provisions that prohibit or restrict
disclosure and that are materially inconsistent with the AIA, that is, if provisions of the Competition
Act are inconsistent with the AIA, the provisions of the AIA apply.  There does not appear to be
inconsistency between the Competition Act and the AIA - the Competition Act is a relatively recent
piece of legislation and incorporates all constitutional aspects.
Sections 44 of the Act provides for confidentiality to be claimed in respect of information
submitted to the Competition Authorities, requiring an explanation as to why the information should
not be in the public domain.  Nonetheless, the righ t to claim confidentiality is balanced against the
right of access to information in Section 45.  It allows for the Tribunal to make an order as to
appropriate access to confidential material.
IV. NON - DISCRIMINATION
Section 9  of the Constitution enshrines the right to equality and the right not to be unfairly
discriminated against.  Everyone is equal before the law and has the right to equal protection andbenefit of the law.  However, subsection 9(2) of the Constitution  states that in order to promote the
achievement of equality, legislative and other measures designed to protect or advance persons, or
categories of persons, disadvantaged by unfair discrimination, may be taken.
Section 3(1)  of the Competition Act applies to all economic activity within or having an
effect within SA.  To the extent that there is no differential treatment of any specific sector or
industry, and that all firms irrespective of their size  or origin must comply with the Act equally, the
application of the Act is non-discriminatory.  The comprehensive sweep of Section 3(1)  also means
that export cartels, legal/accepted in other international jurisdictions, whose economic activity has an
effect in South Africa, fall within the jurisdiction of the South African competition authorities, who
may act against such a cartel.  See The Competition Commission of SA & Botswana Ash (Pty) Ltd
vs American Natural Soda Ash Co rp (Botash/Ansa c 87/CR/Sep00).
Section 53 of the Act allows any person  who has a material interest in a matter being heard
by the Tribunal to participate in that hearing.  This provides a mechanism for persons who may not be
in a position to initiate proceedings, to ensure that their rights and interests are considered or not
unfairly infringed.
Section 81  of the Act binds the State, thus the application of the Act is extended to include
public/state owned enterprises.  Section 3(1A)  provides that where a sectoral regulator has
jurisdiction over competition matters pertaining in that sector, the competition authorities shall enjoy
concurrent jurisdiction.WT/WGTCP/W/220
Page 4
However, the Act does allow for a degree of differential treatment.  It does this, firstly, by
seeking to promote the viability of small and medium sized enterprises.  Secondly, by seeking to
promote black economic empowerment, that is, by se eking to promote ownership and control of firms
by persons historically disadvantaged by apartheid.
Reconciling the apparent contradiction between the principle of non-discrimination and certain
of the public interest provisions of the Competition Act
According to Constitutional Principle V, equal ity before the law includes laws or activities
that have as their object the amelioration of the conditions of the disadvantaged, including those
disadvantaged on the grounds of race, colour or gender.1 Clearly the Constitution envisages the role of
the equality provision as a good in itself but, further, as a powerful tool of national reconstruction anddevelopment.  Therefore it is constitutionally accep table to balance the right to equal treatment before
the law against other national objectives such as those specified in the public interest provisions of the
Competition Act because their purpose is to advance the interests of those disadvantaged by past acts
of discrimination.
Those public interest objectives whose realization may compromise the principles of equal
treatment/non-discrimination are encapsulated in section 2  of the Competition Act, most notably 2(e)
and (f) - respectively "to ensure that small and medium-sized enterprises have an equitable
opportunity to participate in the economy", and "to increase the ownership stakes of previously
disadvantaged persons."  This approach recognizes that the inequality embedded in the South Africaneconomy and society cannot be tackled simply by treating all in exactly the same way.  Hence, the
Competition Act, in common with most other major social and economic statutes, recognizes these
structural inequalities and, in the form of the public interest objectives, provides mechanisms designed
to contribute to their amelioration.
Nor are the public interest objectives specified above left at the level of general principle.
Hence Section 10 of the Act provides that a practice or agreement that is otherwise proscribed by the
Act may nevertheless be exempted from the application of the Act provided that the authorities are
satisfied that the practice of agreement contributes to the realization of a specified set of objectives
including, "promotion of the ability of small businesse s, or firms controlled or owned by historically
disadvantaged persons, to become competitive".  Section 12A of the Act specifies that when the
authorities evaluate a merger they must, after first determining whether or not the transactioncontributes to a substantial lessening of competition, determine the impact of the transaction on a
number of specified public interest factors that again include "the ability of small businesses, or firms
controlled or owned by historically disadvantaged persons, to become competitive".  In the final
decision, a positive assessment of the transaction's impact on public interest may permit an anti-
competitive transaction to proceed;  a negative assessment of the impact on public interest may resultin the prohibition or conditional approval of a transaction that has been determined to be competition-
neutral or even pro-competitive.
In summary, the Act specifically permits discrimination in favour of  small and medium-sized
enterprises and firms owned by historically disadvantaged persons.  It does not, however, countenancediscrimination against  any class of business or person.  A transaction involving a foreign-owned firm
or firms will be evaluated against the same set of criteria, including its impact on public interest, as
that used when one or both of the firms in quest ion are South African owned.  If, however, a South
African owned firm involved in a transaction is also owned by historically disadvantaged South
Africans then that fact may influence the outcome of the overall evaluation - negatively, if thetransaction undermines the ownership stake of historically disadvantaged persons, positively if it
promotes that interest.  By the same token, a firm owned by historically disadvantaged persons may
                                                     
1 Constitutional law of SA, Chaskalson et al , Chapter on "Equality" by Kentridge, J. 1999. Juta.WT/WGTCP/W/220
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apply for an exemption from the application of the Act on the grounds that the exemption is required
to promote its competitive position - if the authorities are persuaded of this then they may grant the
exemption.  A foreign owned firm or a firm owned by white South Africans may argue for an
exemption on the grounds that the anti-competitive practice in which they intend to engage is required
to promote the competitiveness of suppliers or distributors or otherwise associated firms that areowned by historically disadvantaged persons.  Note that since few small and medium-sized
enterprises or firms owned by historically disadvan taged persons are likely to be dominant in their
respective matters their conduct is unlikely to fall foul of the provisions of  the Act that proscribe anti-
competitive.  Nor are mergers in which these firms pa rticipate likely to lead to a substantial lessening
of competition.
The public interest provisions designed to promote the competitiveness of small and medium-
sized enterprises appear compatible with the objective of Paragraph 25 of the Doha Declaration
which provides that "…full account should be taken of the needs of developing & least developed
country participants and appropriate flexibility provided to address them".  Note that the Aristotelian
adage, that equality is a matter of treating like cases alike and unlike cases differently in proportion to
their likeness or difference, that, in other words, e quality is not merely a matter of likeness but also a
matter of difference, has been accepted by the International Court of Justice in numerous cases.
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V. PROCEDURAL FAIRNESS
The principles of procedural fairness and natural justice are manifest in the protection of the
following rights:
Section 33  of the Constitution deals with just administrative action:
(1) Everyone has the right to administrative action that is lawful, reasonable and
procedurally fair.
(2) Everyone whose rights have been adversely affected by administrative action has the
right to be given written reasons.
In terms of Section 52(2 ) of the Competition Act the Tribunal must conduct its hearings as
expeditiously as possible and in accordance with the principles of natural justice.  The essential and
fundamental principles of natural justice, for example the audi alteram partem rule (hear the other
side), are given substantive effect by the application of the Tribunal's Rules for the Conduct ofProceedings, which supplement the provisions of the Act.
Standard rules of South African civil procedure are followed, which dictate that a party has
the right to respond to the submissions of its opponent.  In particular, our rules of "discovery" provide
that parties must produce all documents reasonably required by the other side or by the Tribunal.  TheAct and the Rules of Procedure determine the maximum time frames that govern all proceedings,
including the provision of documents.
The Act and the Rules also provide for pre-hearing conferences.  These allow for consultation
and agreement between the parties and the Tribunal as to the procedural aspects of any matter.  Notonly does this advance procedural fairness, it also reinforces the principles of openness and
transparency.
Sections 61 and 62 of the Competition Act give parties the right to take decisions of the
Tribunal on review or appeal to the Competition Appeal Court.  Although the Competition Tribunal
                                                     
2 Constitutional law of SA, Chaskalson et al , Chapter on "Equality" by Kentridge, J. 1999. Juta.WT/WGTCP/W/220
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and Competition Appeal Court have exclusive jurisdiction in all competition matters, parties may
elect to proceed to the High Court (rather than the Competition Appeal Court) in respect of procedural
reviews.  The Constitutional Court naturally has final jurisdiction over all constitutional matters.
VI. CONCLUSION
South African competition law and practice accords with the highest standards of
transparency, non-discrimination and procedural fairness.  This has substantially enhanced the
credibility of the competition authorities, bot h those charged with investigative and advocacy
functions and those charged with adjudicative responsibility.
Adherence to the principle of transparency has also enhanced the credibility of the
competition authorities and it has helped promote a competition culture in South Africa.  It hasensured a high degree of participation in competition proceedings including considerable media
coverage and public comment.
The principle of non-discrimination has not operated at the expense of pursuit of key national
industrial and social policy objectives, where those objectives are manifestly designed to address theconsequences of past discrimination.
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