14 October 2019

International Cases

Air products south africa v. Alba gas (pty) ltd

South Africa


MRTP/ Competition Laws

Firm exercising characteristics of power against one player due to contractual relationship between the two, cannot be interpreted to imply that, it would be able to do so on a broader level

Present matter concerns two interlocutory applications, an amendment application and an exception application, arising from a private complaint referral brought by Alba Gas (Pty) Ltd ("Alba") against Air Products South Africa (Pty) Ltd ("Air Products"). Air Products is the applicant in exception application, which Alba opposes. Alba, in an attempt to rectify grounds of exception raised by Air Products, brought an amendment application.

On 20 February 2017, Mr Anderson on behalf of Alba, an unrepresented complainant, referred a complaint against Air Products to Tribunal following a notice of non-referral by Commission.' Alba self-referred complaint to Tribunal in terms of Section 51(1) of Competition Act of 1998. Alba is an industrial gas distributor in Roodepoort, Gauteng. Air Products a manufacturer, supplier and distributor of industrial and specialty gas with a network of independent distributors, of which Alba was one. Tribunal issued a direction ordering the amendment and exception applications to be heard simultaneously in one hearing. In its amendment application, Alba seeks to amend its referral by alleging that, Air Products contravened section 8(1)(a) and 9(1)(c) of the Competition Act, 1998.

Tribunal, importing the principles applied by High Courts in amendment applications, has found that, it will grant amendments in the instances where the application is not made male fide and where the application would not cause harm to the opposite party which could not be remedied by a cost order, if appropriate. In the present matter, Alba submitted that the amendment was intended to cure the defects in the complaint raised by Air Products in its exception application. Alba responded timeously to the exception application even though it did not file an answering affidavit. During the hearing of these applications, the Tribunal considered the fact that, Air Products submitted that it was not opposing the amendment application. Amendment application was not made male fide and did not in anyway prejudice Air Products. Tribunal granted the amendment application.

To define the relevant market as provision of industrial gas to Alba, is too myopic, a view of competitive landscape relevant to this matter. It conflates the concept of market power derived from a firm's market position with power derived from a contract freely entered into by Alba. The fact that, a firm may exercise characteristics of power against one player in a market because of the contractual relationship between the two, cannot be interpreted to imply that, firm would be able to do so on a broader level.

In present case, even if the Tribunal were persuaded by the argument that, the provision of industrial gas to Alba was a discrete component of the relevant market, the factual allegations made out indicate that, Air Products exercised market power in the market for the provision of industrial gas to Alba Gas, but no allegations are made that it possessed market power in relation to the broader market for the provision of industrial gas in the West Rand area. In present matter, the allegations made out concerning the relevant market do not establish market dominance for the purpose of the Act. Failure to do so renders the pleadings incomplete. Given that, the Tribunal is not with Alba in respect of the definition of the market and as such, is not of view that, Alba has made a case strong enough to establish Air Products' dominance, there is no need to continue with the enquiry as to the other elements of Section 8 and Section 9 cases.

Alba had the opportunity to clarify its case through amendment application. During hearing of present applications, it admitted that it does not have additional arguments in relation to dominance than those ventilated at this hearing. It must also be noted that, at the time of bringing the amendment application, Alba had the benefit of viewing Air Products' comprehensive answering affidavit and exception application, replete with numerous references to case law explaining what would be required of an adequate referral. Alba failed to seize opportunity to amend its complaint in a manner that would have brought it in line with Rule 15(2), which would have put the exception to rest and obligated Air Product to respond accordingly. This did not happen. Application to amend is granted as requested. Exception application is upheld and complaint referral under case is dismissed.

Tags : Prohibited practice Complaint Amendment Exception Application

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