Cape Gate cartel case heads to ConCourt
· Citizen
Cartel conduct by South Africa’s large steel manufacturers ceased more than 20 years ago, yet litigation in the case is still alive and has now proceeded to the Constitutional Court.
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The Competition Commission is seeking leave to appeal the dismissal of a guilty finding against alleged cartel member Cape Gate. The Competition Appeal Court (CAC) remitted the decision back to the Competition Tribunal for a rehearing following a successful review of the decision.
In a rather extraordinary move, the commission is asking for the reinstatement of the tribunal’s finding against Cape Gate.
The tribunal is not appealing the CAC decision.
Inordinate delay
The tribunal took more than six years to issue its guilty finding along with its excuses for the inordinate delay. Cape Gate took this finding on review before the CAC.
In a majority decision, the CAC found that a delay of such magnitude “contaminated the ultimate decision that was made”.
It also found that the tribunal members’ excuse for the delay was “false and contradicts the explanation they proffer in their respective explanatory affidavits”.
The CAC upheld the review and remitted the decision back to the tribunal for a new hearing but before a different panel.
The commission says it successfully prosecuted Cape Gate before the tribunal and a new hearing is no longer feasible – a key witness for the commission has passed away, and the only other witness is of an advanced age.
Price-fixing
The price-fixing complaint against the steel producers was heard by the tribunal just before the outbreak of the Covid-19 pandemic.
Cape Gate, alongside ArcelorMittal, Columbus Stainless and Scaw, was accused of being party to a buyer’s cartel.
Cape Gate denied culpability from the start. When the tribunal found it guilty of the conduct in 2025 – more than six years after hearing evidence – the firm took the decision on review before the appeal court.
The commission believes the majority decision before the CAC was “misdirected and erred” in its application of the principles laid down in the jurisprudence for assessing delay by administrative bodies.
“The commission seeks to advance the principle before the Constitutional Court that a firm – Cape Gate – cannot be immunised from liability for cartel conduct on the basis of the tribunal’s delay in issuing its decision where there is evidence that the firm engaged in cartel conduct,” a spokesperson said in response to questions.
‘Obfuscation, omission and inaccuracy’
Cape Gate is opposing the application for leave to appeal, saying it is predicated on “obfuscation, omission and inaccuracy” regarding the majority’s treatment of the evidence.
One of the tribunal’s excuses for not making a decision sooner is that “the parties”, namely the commission and Cape Gate, informed the panel that they were in settlement discussions. The finalisation of the reasons for its decision was put on hold for that reason.
Both the commission and Cape Gate denied ever being engaged in settlement negotiations.
Cape Gate presented evidence of around 30 emails by itself and the commission repeatedly asking the tribunal for a decision – never mentioning any settlement discussions.
The CAC accepted their allegations that, in advancing the negotiations as a reason for the delay, the panel members acted “either in reckless or deliberate disregard of the truth”.
When it became known that a review application was brought, a former case manager allegedly sent a letter to the tribunal.
In a separate letter sent to Moneyweb, she denies ever mentioning settlement talks between the commission and Cape Gate to the panel members.
Explanation for delay not ‘unreasonable’
The commission’s chief legal counsel, Bakhe Majenge, says in his statement before the Constitutional Court that the majority placed excessive weight on the delay in the tribunal’s issuing of its decision.
It treated the delay as a ground for review even when Cape Gate had failed to establish any grounds of review, he said.
The commission endorsed the dissenting judgment before the CAC that would have condoned the delay even though it was “inordinate”.
The minority found that “the unreasonable delay of six years and two months in the issuing of the decision does not necessarily mean that the explanation provided by the tribunal and members of the panel for the delay is also unreasonable”.
Majenge says the majority was fixated on considering the reasons “false” when there was no contradictory evidence to support this finding.
In their answering affidavit, Cape Gate’s legal counsel Lucinda Verster notes that the CAC made a “finding of fact” that the three panel members had been dishonest in the reasons.
This finding is not being appealed by the commission in its application to the Constitutional Court. The tribunal has not appealed the CAC decision.
Verster says the falsity of the excuses given in the tribunal’s reasons, and the dishonesty exhibited in making those excuses, were Cape Gate’s first ground of review.
“Therefore, even if the commission were successful in all the grounds of appeal they raise in this application, the CAC’s finding on the dishonesty of the tribunal members would stand unimpeached.”
This article was republished from Moneyweb. Read the original here.