Spartan Caselaw

Coca-Cola Beverages Africa v Competition Commission [2024] ZACC 3

COMPETITION – Merger – Retrenchments

Correct test for determining causal link between merger and retrenchments – Merger approval conditions prohibiting retrenchments as result of merger – Coca-Cola’s reasons being to reduce costs to address impact of sugar tax and adverse macroeconomic circumstances – Tribunal declared Coca-Cola had substantially complied with pertinent condition – Competition Appeal Court overturned decision of Tribunal – Mischaracterised nature of appeal and applied wrong tests in respect of both review and causation – No basis in law or fact for overturning judgment of Tribunal – Commission Rule 39(2)(b) – Competition Act 89 of 1998, s 27(1)(c).

Facts: A large merger was approved by the Competition Tribunal in 2016 which created a single bottling entity, Coca Cola Beverages South Africa (CCBSA), from four, previously independent, authorised bottlers for The Coca-Cola Company (TCCC). Pre-merger, TCCC supplied concentrate and beverage bases to each of the four bottlers. The bottlers were each separately authorised to prepare, package, distribute and sell the Coca-Cola products in a particular geographic area. There was no overlap, so the bottlers did not compete. A number of interested parties participated in the merger proceedings and negotiations took place between them. The merging parties negotiated settlement agreements with the Minister and the Food and Allied Workers Union (FAWU). A further merger at holding company level was approved involving the purchase of SABMiller’s 54% shareholding. The conditions from the first merger remained in place. During 2017 economic conditions deteriorated and the “sugar tax” was imposed. Coca-Cola corresponded with the Competition Commission and implemented retrenchments. The Commission issued a Notice of Apparent Breach.

Appeal: Section 12A of the Competition Act 89 of 1998 requires that, when deciding whether a merger is in the public interest, its effect on employment must be taken into account. If it is decided to approve the merger, conditions may be imposed relevant to that impact. Here, conditions were imposed on approval of a merger that restricted post-merger retrenchments. This application for leave to appeal arises from a complaint that Coca-Cola Beverages Africa (CCBA), the applicant, retrenched staff in breach of those conditions. CCBA seeks leave to appeal against a judgment of the Competition Appeal Court. The Competition Appeal Court overturned a decision of the Competition Tribunal finding that CCBA had substantially complied with the conditions.

Discussion: The Tribunal granted an order declaring that Coca-Cola had substantially complied with the pertinent condition and set aside the notice of apparent breach. The probabilities were found to have favoured Coca-Cola’s reasons for the retrenchments, namely the need to reduce costs to address the impact of the sugar tax, adverse macroeconomic circumstances and rising input prices. The Commission appealed to the Competition Appeal Court which identified, as the main questions for decision, the nature of the review under section 27(1)(c) read with Rule 39(2) and the correct test for deciding whether retrenchments were “merger specific” rather than due to operational requirements. Rule 39 of the Commission Rules deals with breach of merger approval conditions or obligations. Rule 39(2)(b) provides for a separate and context specific form of review to determine breaches of merger approval conditions. Section 27 deals with the functions of the Tribunal. The Competition Appeal Court criticised the Tribunal for imposing an evidentiary burden on the Commission, because the merged party had the full facts and should be able to demonstrate compliance with the merger conditions if that was the case. The Competition Appeal Court noted that, despite the extended operation of the conditions following the second merger, TCCC as the new controller effected the retrenchments. It said that the incentives of the new controlling shareholder are highly implicated in the circumstances. The Competition Appeal Court overturned the decision of the Tribunal.

Findings: The test for review is simply that laid down in the text of Rule 39(2)(b) – objectively, has Coca-Cola substantially complied with its obligations under the conditions attached to the merger? The Competition Appeal Court’s approach provides no convincing basis for rejecting the conception of Rule 39(1) and (2)(b) as providing for a special statutory review. The Tribunal rejected what it described as the “delictual test” involving the two stage enquiry into factual and legal causation, but the Competition Appeal Court rejected the Tribunal’s approach. The Competition Appeal Court was accordingly wrong in finding that the Tribunal applied the incorrect test for a causal nexus. There was no basis for the Competition Appeal Court to interfere in the factual findings of the Tribunal. The Tribunal’s analysis of the facts was cogent and revealed no misdirection, nor any clear error. The Competition Appeal Court mischaracterised the nature of the appeal and applied the wrong tests in respect of both review and causation. There was no basis in law or fact for overturning the judgment of the Tribunal.

Order: The appeal is upheld and the order of the Competition Appeal Court is replaced with an order dismissing the appeal and that each party must bear its own costs. Each party must bear its own costs in this court.

DODSON AJ (unanimous)

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Mapisa-Nqakula v NDPP [2024] B9-2024 (GP)

CRIMINAL – Arrest – Interdict and judicial peek

Alleging urgency stems from threat to arrest applicant without due and lawful process – Arrest without detention is not urgent – No facts set out why future arrest will be unlawful – Setting out on speculation that there is a weak case against applicant – Not competent to interdict arrest – Discretion not to take judicial peek exercised – Found inappropriate – Application struck from roll.

Facts: The applicant is the Speaker of the National Assembly and has been under police investigation after allegations that she solicited bribes in return for awarding contracts when she served as Minister of Defence. It is alleged that she received 11 payments between December 2016 and July 2019 and after that sought another bribe which was not paid. It is alleged that the bribes totalled R2,3 million. The Directorate for Priority Crime Investigation (DPCI), commonly known as the Hawks, conducted a search and seizure operation at her home which lasted around five hours and seized certain items.

Application: Urgent application seeking to interdict and restrain the respondents from arresting the Speaker, notwithstanding any warrant of arrest pending the final outcome of the main application. Furthermore, that the court is to exercise a discretion to take a judicial peek into the State’s brief, including the docket to decide the application.

Discussion: The grounds for the accelerated or anticipated urgency application is set out as that the unlawful arrest is imminent and it intended to take the applicant and her attorney by surprise. It is further set out that the State’s case is underpinned by an underwhelming, weak investigation and riddled with irregularities which could never justify the infringement and imperilment of the applicant’s constitutional rights, let alone the applicant’s position as the Speaker of the Parliament. The respondents deny that the matter is urgent and submit that any urgency is self-created. The applicant knew since 8 March 2024, when Mr Perumal contacted the applicant and asked who her attorney is, that her arrest was imminent. For a period of two weeks, no arrest has been carried out. The urgent applications were brought while the NDPP was still engaging with the applicant to hand herself over at the police station for processing in preparation for the enrolment of the matter. Before this application was brought, it was indicated to the applicant that the respondents would not oppose bail. An arrest, on its own, cannot create urgency, especially when there is no apprehension of detention. The applicant concedes it was brought to her attention that resort to section 40 of the Criminal Procedure Act 51 of 1977 would be the last resort. This fact is now, however, used as to create urgency despite it being a last resort.

Findings: The applicant, by means of her attorney, sets out in the main application that the NDPP does not even intend to oppose bail. This was already in the main application set out, making it clear that detention was not in issue. The NDPP confirms that it will not oppose bail. Arrest without detention simply is not urgent. There is not a single fact set out as to why the future arrest will be unlawful. Seemingly because there is a weak case made out. Yet, the applicant does not know what case has been set out and this is pure speculation. These facts cannot underpin urgency. The respondents argued that it would not be competent for the court to interdict an arrest, to which the court agreed. If the court grants such an order, the floodgates will be opened. Every suspect will be able to approach a court, on an urgent basis, setting out on speculation that there is a weak case against them and interdict an arrest. The applicant is afforded legal representation. She has been afforded the right to legal representation in the pre-trial and pre-arrest stage. The court cannot grant an interdict to prevent statutory authorities from complying with their statutory duties. The prayer to take a judicial peek is for the court to determine whether an arrest would be unlawful. The court exercised its discretion not to take a judicial peek and found this inappropriate. This court is not a means to declare an arrest, which has not taken place, unlawful or that it would be unlawful, or express a view thereon or make a value judgment.

Order: The application is struck from the roll.

POTTERILL J

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Penbro Kelnick (Pty) Ltd v CCMA [2024] ZALCJHB 163

LABOUR – Dismissal – Covid-19 face mask – Found to be substantively unfair

Found not wearing face mask – Final written warning issued for transgression – Sought harsher punishment after written warning due to alleged untruthful explanation – Sanction of dismissal was expression of moral outrage and vengeance rather than sensible operational response to risk management – Decision to dismiss was not an appropriate response to operational risk – Findings reasonable – Application dismissed.

Facts: The respondent was employed by the applicant as a stock controller. He was dismissed following a disciplinary enquiry into allegations of misconduct. The allegations arose at the height of the Covid-19 pandemic in 2020. The respondent was issued with a final written warning for failing to wear his face mask at the workplace. He was again charged with dishonesty in that he lied to a Senior Manager, regarding the wearing of Covid-19 PPE. Having referred an alleged unfair dismissal dispute to the CCMA, and when attempts at conciliation failed, the matter came before the commissioner, resulting in an arbitration award.

Review: The commissioner had found that the dismissal was substantively unfair, and had ordered retrospective reinstatement, together with back-pay. The applicant seeks an order reviewing and setting aside the arbitration award. In the second application, the respondent seeks an order dismissing the applicant’s review application on account of lack of timeous prosecution.

Discussion: The real issue, contrary to the applicant’s contentions, is not simply whether the respondent had lied when asked the reason why he did not have his mask on. The principal enquiry is whether from an assessment of the facts, it can be said that there was a fair reason to dismiss him, and whether on those facts, it can be said that the commissioner’s conclusions fall outside a band of reasonableness. The respondent was seen without a face mask at the workplace. For these types of transgressions, the offender would be issued with a final written warning. A final written warning was indeed issued to the respondent. Even if after the final written warning was issued, the manager had suddenly felt compelled to seek a harsher penalty against the respondent on the basis that the latter’s explanation for not wearing his face mask was untruthful, the question is whether upon a consideration of fairness, a second hearing was justified. The enquiry is extended to whether arising from the second enquiry where it was justified, a sanction of dismissal was appropriate. Even if the court were to accept that the respondent had admitted that he made a mistake in not having his face mask on or had proffered an explanation which was considered as false and necessitating a further enquiry, this on its own did not justify a harsher sanction than he had already received.

Findings: A dismissal should not be an expression of moral outrage or an act of vengeance, but rather should be a sensible operational response to risk management in the enterprise. Since the respondent was charged for dishonesty in that he lied to the manager, the seriousness of dishonesty, and whether it can be classified as gross or not, depends not only or even mainly on the act of dishonesty itself, but on the way in which it impacts on the employer’s business. It does not imply that every act or misconduct involving dishonesty will lead to a dismissal. A misconduct cannot be gross simply based on the subjective opinion or feelings of a manager. The gross nature of misconduct necessitating a dismissal can only be gleaned from the objective facts. Even if the court were to accept that the respondent had lied about the reason why he did not have his face mask on and that this justified a second enquiry, a sanction of a dismissal was an expression of moral outrage and vengeance, rather than a sensible operational response to risk management at the workplace. This was so based on the common cause facts that the manager was upset at the respondent to the extent that not only did he address him in unsavoury language, but he also told him that he should leave the workplace and not to come back. The mere fact that the manager was upset at the time and unhappy with the sanction for whatever reason, could not have made the alleged misconduct of dishonesty gross, to attract the ultimate sanction. The misconduct cannot be said to have harmed the applicant in any manner since employees were issued with final written warnings and permitted to return to work, notwithstanding the dangers of the Covid-19 pandemic at the time. One cannot speak of the applicant’s decision to dismiss being an appropriate response to an operational risk posed by the respondent.

Order: The application to review and set aside the arbitration award is dismissed.

TLHOTLHALEMAJE J

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