The High Court, on Friday, released its judgement in respect of the on-going conflict of interest dispute between Netcare Hospital Proprietary Limited, KPMG Services Proprietary Limited and the Competition Commission. Netcare claimed that KPMG cannot act as a service provider to the Commission in respect of the Commission's inquiry into the private healthcare market. Netcare claimed that KPMG would, in acting for the Commission, breach its fiduciary duty of loyalty towards Netcare (an erstwhile client of KPMG) and that this would constitute a conflict of interest.

In essence, Netcare's concern was that the Commission, through KPMG would (if it has not already) obtain access to confidential information of Netcare, including cost, pricing and margin information, which would be relied on by the Commission during the course of its market inquiry to the detriment of Netcare.

Netcare, in October 2013, brought an urgent application to interdict KPMG from disclosing its information to the Commission, which was settled between the parties. In terms of this settlement KMPG's systems were to be purged of Netcare's information. A dispute arose in respect of whether the order was in fact complied with and Netcare brought an application for amended relief including interdicting KMPG and, alternatively, certain KPMG employees from assisting the Commission.

The Court found that the relationship between KPMG and Netcare ended prior to KPMG being officially appointed by the Commission to assist with the healthcare inquiry. Accordingly, once the relationship between KPMG and Netcare ceased, KPMG no longer had a fiduciary duty towards Netcare, save for retaining confidentiality over Netcare's information. The Court found that Netcare was not able to establish that it had a prima facie right which was intruded on through KPMG's engagement with the Commission.

The Court further found that Netcare did not establish a well-grounded apprehension of irreparable harm as the risk of disclosure of its confidential information was not imminent as

  1. any information still held by KPMG is protected by contractual undertakings of non-disclosure in the favour of Netcare;
  2. the Commission provided undertakings that it would not request KPMG to divulge confidential information; and
  3. the Commission has statutory powers that would enable it to obtain the information through legitimate means should it wish to have access to it (either through Netcare's voluntary participation in the healthcare inquiry or by virtue of a subpoena).

The Court determined that the balance of convenience was in the Commission's favour as granting the interdict would result in delays that may result in the Commission not meeting the deadline for the conclusion of the healthcare inquiry by virtue of the Commission having to find an alternative service provider with comparable resources to assist it.

Ultimately, the court found Netcare would be able to claim for breach of contract in the event that KPMG disclosed its information and that the relief sought by it was not appropriate in the circumstances.