In the case of Competition Commission of South Africa v Pioneer Hi-Bred International Inc and Others, the Constitutional Court handed down judgment in a matter concerning the power of the Competition Appeal Court (“the CAC”) to order costs against the Competition Commission of South Africa (“the Commission”).
The Commission investigated and subsequently prohibited a proposed intermediate merger between Pioneer Hi-Bred International Inc and Pannar Seed (Pty) Ltd (the “merging parties”) on the basis that it would substantially prevent or lessen competition.
Upon request by the merging parties to reconsider the decision by the Commission, the Tribunal reiterated the Commission’s decision and also prohibited the merger.
The merging parties then appealed to the Competition Appeal Court (“the CAC”) which conditionally approved the merger and ordered the Commission to pay the costs of the merging parties in both the CAC proceedings as well as the Tribunal proceedings.
The Commission subsequently approached the Constitutional Court seeking leave to appeal against the costs order granted against it in the Competition Appeal Court.
The Constitutional Court highlighted the need for the Commission to have sufficient autonomy to defend its position under the Competition Act without being hindered by the threat of adverse costs orders.
The Court held that as the Commission is not an ordinary civil litigant it should not, in the ordinary course, be burdened with costs where it is unsuccessful in its litigation.
In this regard, a costs order was appropriate only where special circumstances existed that required such an order, such as where the Commission pursued a specific position in an unreasonable, frivolous or vexatious manner.
The appeal was accordingly upheld and the costs order was set aside.
Written by Molisa Cheda.