On July 27 2012 the Competition Appeal Court dismissed an appeal by Paramount Mills (Proprietary) Limited against an order of the Competition Tribunal. The tribunal order had rejected Paramount's application to dismiss a complaint referral by the Competition Commission on the grounds of the referral being time barred and not legally competent. Paramount appealed to the Competition Appeal Court.

Following the prosecution of a bread cartel - involving Premier Foods, Tiger Brands and Pioneer Foods - for fixing prices and other trading conditions, the commission expanded its investigation into the maize meal market to include Paramount, which was revealed as an alleged cartel participant during the investigation.

On March 31 2010 the commission referred a complaint to the tribunal against Paramount and 17 other respondents, alleging that they operated a cartel in the market for milled white maize meal from 1999 to 2007. The commission sought an administrative penalty of 10% of each respondent's annual turnover.

Paramount denied that it had participated in any cartel meetings with the major market players or reached agreement in respect of price. Paramount approached the tribunal for an order dismissing the referral. The company averred that the complaint was not legally competent, as it did not meet the test of legality and intelligibility, and that it was time barred because Paramount was implicated only in telephone conversations that had taken place in September 2006.

The tribunal dismissed Paramount's arguments, ruling that it had not properly pleaded the prescription point in its answering affidavit and had not averred facts to show that the conduct had ceased.

In addition, the court held that:

  • Paramount's reliance on the test in Woodlands Dairy (Pty) Ltd v Competition Commission (2010 (6) SA 108 (SCA)) in relation to legality and intelligibility of the complaint referral was misplaced in the context;
  • Paramount's reliance on Loungefoam (Pty) Ltd v Competition Commission (102/CAC/Jun 10) was incorrect, in that tribunal referral proceedings are not equivalent to motion or application proceedings in the High Court; and
  • the commission had pleaded with sufficient particularity to enable Paramount to understand the allegations against it. If Paramount had felt disadvantaged, it could therefore have raised an objection before filing its answering affidavit.

The court dismissed the appeal with costs.

For further information on this topic please contact Janine SImpson at Webber Wentzel by telephone (+27 11 530 5000), fax (+27 11 530 5111) or email ([email protected]).