The Competition Tribunal recently confirmed that its discretion to award costs where an application is withdrawn or abandoned should be exercised judiciously with due regard to the principles of justice and fairness.
As a general rule, an applicant who subsequently abandons or withdraws an application before the Tribunal is considered as having conceded on the merits and is responsible for the wasted costs incurred by the respondent in having to defend the matter.
However, National Union of Metal Workers of South Africa (NUMSA) versus Marley Pipe Systems (Pty) Ltd (Marley) and the Competition Commission (Commission) presented a unique set of facts.
In terms of the background, the Tribunal approved a merger involving Marley, as the acquirer, subject to a condition requiring Marley to re-employ a number of the target firm's employees. This condition could be lifted, revised or amended by the Commission on good cause shown.
Marley then approached the Commission with a request to revise the condition. The Commission denied this request on the basis that the revision did not meet the threshold for good cause shown. This led to Marley filing an urgent application to the Tribunal to review the Commission's decision. NUMSA was cited as a party to the review application and filed answering affidavits dealing extensively with the facts and issues of law raised by Marley. Ten days before the scheduled hearing, NUMSA was made aware that the Commission and Marley were in exploratory discussions regarding settlement of the matter, but nevertheless persisted with filing its papers. A day before the application was to be heard, Marley withdrew its application. The reason for withdrawal was as a result of a last minute decision by the Commission to review the employment condition (ie there was no longer any need to review the Commission's decision as the last minute offer by the Commission provided Marley with the relief it sought).
NUMSA then sought an order for wasted costs against Marley. In Marley's defence, it argued that it had not acted mala fide in withdrawing the application, the application was rendered moot by the settlement agreement that it reached with the Commission and withdrawal of the application ensured that the Tribunal and the parties' time was not wasted in seeking relief that was now not necessary.
The Tribunal held that the withdrawal of the review application was not a concession on the merits by Marley; it was neither fair nor logical for Marley to continue with the application in light of the settlement agreement and whilst it appreciated the role played by NUMSA in assisting the Tribunal with its submissions, justice and fairness dictated that each party pay its own costs.
Whilst this decision indicates that a bona fide withdrawal of an application may avert an adverse cost order, the Tribunal will decide each matter on its own facts. Importantly, principles of justice and fairness will guide the Tribunal's discretion and it is thus essential that, when abandoning a matter, notice of the withdrawal is provided to the other party as soon as possible.