A recent landmark judgment by the Constitutional Court (CC) has emphasised that competition law must be interpreted and applied with regard to the Constitution.
This was the CC's conclusion after considering whether the Competition Appeal Court (CAC) was correct in reversing a decision by the Competition Tribunal (the Tribunal) to uphold the Competition Commission's (the Commission's) prohibition of the merger between Mediclinic Southern Africa and Matlosana Medical Health Services.
Although the acquisition would lead to only a 0.7% increase in Mediclinic's national market shares, the Tribunal expressed concern about, among other things, the increase in tariffs and the effect of the merger on uninsured patients. When the matter appealed, the CAC reversed the Tribunal's decision.
Referring to previous CC judgments, the CC said there were particular circumstances in which an appellate court is entitled to interfere with the factual findings of the trial court:
Interference with factual findings by appellate courts would…be justified only in the event of a misdirection or a clearly wrong decision…and this is to be done for the sole purpose of achieving justice.
In the Mediclinic/Matlosana matter, the CC's view was that since the Tribunal had not misdirected itself and was not clearly wrong in its conclusion on the factual or policy issue, the CAC had no legally acceptable basis for interfering with the Tribunal's conclusion and remedy. The CC also found that the CAC did not consider the Tribunal's specialist character and expert grasp of economic, financial and policy concerns in its decision.
The CC held that, among other things, the CAC had failed to:
- give proper effect to the purpose of section 2(b) of the Competition Act; and
- promote the spirit, purport and object of section 27 (the right to access to healthcare) of the Constitution.
Significantly, the CC said that it was harmful to the CAC's judgment that nothing of consequence was said about:
- the vulnerability of uninsured patients;
- the fundamental right to access health care services;
- the objectives laid out in the preamble of the Competition Act; and
- consumer choice.
The CC noted that the Tribunal, in contrast, dealt with public interest issues such as:
- historical concentration in the private hospital sector;
- the risk of escalated tariffs;
- Mediclinic's potential regional dominance; and
- that the merger could potentially limit the choices for uninsured patients.
The CC's minority judgment took a different approach.
Justice Theron (with Justice Khampepe concurring) considered that the CC was not permitted to overturn the factual findings of a specialist court (ie, the CAC) empowered by statute to make such determinations. Theron and Khampepe also disagreed that the CC had jurisdiction over the matter because:
- it would be absurd to hold that the CAC was not entitled to interfere with the Tribunal's remedy since it was entitled to do so once it overturned the Tribunal's findings; and
- although the merger has implications for section 27 of the Constitution, if the CC's jurisdiction was engaged by the mere implication of constitutional rights, the Constitution would be rendered meaningless and the CC's doors would be open to adjudicate all disputes.
The minority judgment said that the CAC had carefully assessed the facts and the Tribunal's decision and found that there was no reason to prohibit the merger, since it was not likely to result in price increases or increased concentration in the healthcare market.
Although the Commission has indicated that the judgment will pave the way for the Commission's constitutional approach to other areas of competition law, the judgment does not change the CAC's primary function of considering appeals arising from Tribunal decisions. Some commentators have remarked that the decision forces merger parties to now assess whether any constitutional rights will be affected by their merger, while others have questioned the effect of the decision on institutional integrity.
As constitutional and competition law become more infused, many more complicated constitutional challenges will arise. Some will have substance and merit, while others will be more opportunistic.
The CC's judgment in this case makes it abundantly clear that merger filings can no longer be limited to narrow competition issues. Filings must provide comprehensive details on all public interest aspects that may be affected by a proposed merger.
For further information on this topic please contact Daryl Dingley or Elisha Bhugwandeen at Webber Wentzel by telephone (+27 11 5305 000) or email ([email protected] or [email protected]). The Webber Wentzel website can be accessed at www.webberwentzel.com.