Book release exclusive: “Class Action Litigation in South Africa”

As foreshadowed over the past 4 years, since the inception of this blog, the topic of class action litigation (aka collective action) has gained momentum in Africa’s southern-most jurisdiction.

For our readers’ consideration, we invite you to purchase our editor John Oxenham‘s new authoritative (and first of its kind) book, entitled “Class Action Litigation in South Africa”.  If interested, please use the form below or e-mail us (editor@africanantitrust.com) for ordering information from JUTA Law publishers.

If you are in Johannesburg, S.A., on Wednesday, 2 August 2017, we would also be delighted if you could attend the book launch event — please be sure to R.S.V.P. to bdev@primerio.international if you plan to do so, however, as it is a private guest-list event only and requires your name for access to the venue.

We are most excited about the volume, which is the first of its kind and deals with a novel area of the law.  It contains chapters written by current and former firm members, including Andreas Stargard, Njeri Mugure, and of course the editor, John Oxenham.

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Antitrust plaintiff-focussed symposium goes off-topic, turns racial

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Race becomes issue at competition-law conference in South Africa

According to several reports, the issue of race came to the fore during a discussion of illegal cartel conduct in South Africa at a recently held plaintiffs’ firm symposium (organised by Hausfeld LLP and Abrahams Kiewitz).  Quoting from Amanda Visser’s BDLive article entitled “Cartels blamed on white men in dark suits” (23 Oct. 2013):

The Black Business Council has come out against cartels in South Africa, with CEO Xolani Qubeka, blaming the practice on “highly educated white male executives in dark suits”.

Mr Qubeka’s comments at a symposium on cartel collusion came after the recent outcry over collusion and cartel activities in the construction industry.

… Mr Qubeka said the Black Business Council aims not only to rid the country of collusive behaviour, but also to instigate criminal cases against the key architects, masquerading as corporate managers, who are committing fraud.

“Consumers in South Africa cannot continue to be abused by highly educated white male executives in dark suits who lock themselves in dark rooms plotting how they can maximise their wealth through self-serving fraudulent schemes against the entire nation,” he said.

Sounds like the infamous old saying about equating cartels to men in smoke-filled back rooms” — only with more incendiary overtones… Ironically, the speaker Mr. Qubeka (who did not complete high school and is an outspoken critic of the S.A. Black Economic Empowerment (BEE) agenda, according to a May 2013 Sunday Times profile and other articles) used to be a Director of South African telecommunications giant MTN — a corporation that has had its own fair share of competition-based complaints and investigations, as we have reported on this blog.

We observe that the conference-sponsoring Hausfeld firm has historically been perceived as opposing racism and, indeed, has helped pursue claims (including pro bono matters) on behalf of groups suffering from discrimination, such as Holocaust survivors.  The firm is currently involved in more traditional plaintiff litigation matters in South Africa, including several miners’ class-action lawsuits against their employers, AngloGold Ashanti  Limited (formerly Anglo American), Harmony Gold Mining Company Limited, and Goldfields Limited (based on diseases allegedly contracted by the class members).  The firm is also involved, again jointly with Abrahams’, in the bread price-fixing class action in South Africa.

Michael Hausfeld

Source: Getty Images via ZIMBIO

AfricanAntitrust.com has an unwritten policy of not commenting on issues irrelevant to antitrust or competition law (that would be: race) and instead staying on topic (that would be: antitrust and competition law).

So: no comment from us on this one…

South African Constitutional Court rules on appropriate test for class action relief for damages

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ZA Constitutional Court broadens ambit of class-action relief

As previously reported, the Supreme Court of Appeal (the “SCA”) handed down two judgments, in November 2012, in respect of the certification of a class in respect of a number of class actions against three bread producers arising from an investigation by the Competition Commission into price fixing and market allocation in respect of various bread products. The appeals were brought by a bread distributor in the Western Cape (the “distributor” application) and by a number of organisations in relation to a so-called “consumer” class action for damages after their applications were dismissed by the Western Cape High Court (the “WCHC”).

The distributors and consumers sought, separately and on appeal to the SCA, to certify three classes, one in respect of the distributors and two in relation to the consumer case. The consumers sought a certification of two classes: Class 1 – all persons who purchased the bread of the three Respondents in the Western Cape Province during the period 18 December 2006 to 6 January 2009; and Class 2 – all persons who purchased the bread of the three Respondents in Gauteng, Free State, North – West or Mpumalanga Province during the period 1 September 2999 to 6 January 2009. The respondents in the appeal were three bread producers, namely Pioneer Foods, Tiger Consumer Brands Limited and Premier Foods Limited.

The SCA upheld the appeal only in relation to the certification of consumer Class 1, and dismissed the consumer Class 2 certification application as well as the certification of the distributor’s class. In a landmark decision, the SCA held that class actions should be recognised, not only in respect of constitutional claims, but also in any other case where access to justice in terms of Section 34 of the Constitution recognized that it would be the most appropriate means of litigating the claims of the members of the class. The decision, per Wallis JA, laid down criteria for class action claims (these included certification, a class definition, a cause of action, a triable issue, common issues of fact or law and a representative who did not have a conflict). Furthermore, in highlighting the importance of the certification process, it set out further requirements that should be met in order to succeed with an application for certification of a class.

The distributors subsequently sought leave to appeal the decision of the SCA. Today, on 27 June 2013, the Constitutional Court handed down a judgment upholding the appeal against the SCA’s distributor decision. The majority judgment, written by Jafta J, stated that the standard for determining whether to permit the certification of a class is to determine whether the institution of the class action, while taking account the requirements laid down by Wallis JA, is in the “interests of justice.”  Accordingly, the requirements for seeking class action relief have been diluted somewhat and greater discretion is given to the court which will consider the certification application, as “[a]ccess to courts is fundamentally important to our democratic order.”

The Court admonished trial courts not to limit certification only to those cases in which strictly all factors enunciated in the Bread decisions were present:

“These requirements must serve as factors to be taken into account in determining where the interests of justice lie in a particular case.  They must not be treated as conditions precedent or jurisdictional facts which must be present before an application for certification may succeed. The absence of one or another requirement must not oblige a court to refuse certification where the interests of justice demand otherwise.”

In a separate concurring judgment, Froneman J noted that the development of the common law to make provisions for class actions in non-constitutional matters was a valuable contribution to the law and provided courts with flexible guidelines to apply in applications for the certification of class actions. Froneman J was, however, of the opinion that the test applied by the SCA was too stringent in not recognising opt-in class relief and secondly in finding that the distributor did not have a legally tenable claim due to the pass-on problem in competition matters.

The Constitutional Court, in the distributor case, has also broadened the ambit of class action relief in recognising opt-in class actions (rather than simply the opt-out class actions accepted by the SCA) and by lowering the threshold required for certification more generally.  On the pass-on front, it also viewed the existence of cognisable damages suffered by intermediate bread distributors – and not only end-user consumers – as “potentially plausible” (echoing somewhat the U.S. Supreme Court in Twombly).

All of the above will have ramifications for future competition-law damages actions.

Class Actions in South Africa?

Nortons Inc., together with the South African Chamber of Commerce and Industry (SACCI) and the Mandela Institute at Wits School of Law, have gathered together a panel of experts to discuss the judgment in Pioneer Foods last year and the effects it has on South Africa’s jurisprudence & business community.

The seminar is entitled: “A new class – the problems and promises of class action litigation in South African law” and runs from 8:00 am – 4:30 pm on Wednesday, 12 June 2013, in Johannesburg at the Wits School of Law (map).

For more information, a full schedule, and to RSVP & sign up,

please visit the event page here.

Background:

On 29 November 2012, Judge Wallis of the Supreme Court of Appeal (the “SCA”) handed down judgment in The Trustees of The Children’s Resource Centre / Pioneer Foods (Pty) Limited & Others. The case related to the certification of a class in respect of a number of class actions against three bread producers arising from an investigation by the Competition Commission into price fixing and market allocation in respect of various bread products (the “Bread class action litigation”).

The appeals were brought by a bread distributor in the Western Cape and by a number of organisations in relation to a so-called “consumer” class action for damages after their applications were dismissed by the Western Cape High Court (the “WCHC”).

In its decision the SCA held that class actions should be recognised, not only in respect of constitutional claims, but also in any other case where access to justice in terms of Section 34 of the Constitution required that it would be the most appropriate means of litigating the claims of the members of the class. The SCA then laid down the requirements for such an action, commencing with the need for certification by the court at the outset, before even the issuing of summons. For this purpose, the SCA set out the following criteria before a court could certify a class action:

  • there must be an objectively identifiable class;
  • a cause of action must exist which raises a triable issue;
  • there must be common issues of law and fact that can appropriately be dealt with in the interests of all members of the class;
  • there must be appropriate procedures for distributing damages to the members of the class; and
  • the representatives must be suitable to conduct the litigation on behalf of the class.

The SCA found that the appellants’ case had changed during the course of the litigation; and it held that their definition of the proposed class was over-broad and the relief they sought inappropriate. However, Wallis JA held that their claim was potentially plausible and, as this was the first time that the SCA had laid down the requirements for bringing a class action, it was appropriate to afford the appellants an opportunity to remedy the flaws in their papers in compliance with these new requirements. Accordingly, the SCA remitted the matter back to the WCHC.

Dutch suit against “paraffin mafia” cartel moves forward

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A Dutch district court has set what some believe may be a new landmark precedent in the area of private cartel enforcement in the European Union, including against South African company Sasol.

The case is what appears to be a fairly straight-forward “follow-on” civil action, i.e., a complaint brought in civil court by injured parties (or those who acquired those parties’ rights to sue) that is based entirely on a European Union Commission decision condemning illegal cartel activity within the common EU market.

My neighbors on the Avenue Louise here in Brussels, CDC (Cartel Damages Claims), had bought the rights to sue from various purchasers of paraffin wax and lodged the complaint against the “paraffin mafia” (Shell’s words, quoted by Neelie Kroes – also see here) in September 2011. The 13-year cartel (1992-2005)** may well result in sizeable civil damage awards (Sasol’s reduced EC fine alone was 318 million €) once the procedural and jurisdictional hurdles have been cleared. And this most recent ruling goes a long way in doing so. The key “procedural issues” that had to be resolved first were whether all of the cartel members could be sued in the Netherlands, even though not all of them operated in that country, and whether the pending EU court appeals against the 2008 Commission decision effectively stayed the parallel civil proceedings in the Dutch court.

The court ruled in favour of the plaintiff group on both accounts, holding that all cartelists could be sued together for damages in the jurisdiction in which any one of their fellow co-conspirators has its seat [here, that would notably be Royal Dutch Shell, ironically the cartel’s whistle-blower that escaped the EC ruling with a zero-€ fine] . That is, even though purported ring-leader Sasol or any of the other [non-Dutch] alleged cartelists may not have had any operations in the Netherlands, they can still be subject to a full-blown civil lawsuit there. In effect, the ruling says that the European Union’s antitrust decisions, combined with the civil protections afforded EU companies and citizens, creates a de facto long-arm statute, reaching beyond the traditional geographic jurisdictional boundaries.

In addition, it held that a pending appeal against an EC cartel decision should not result in an automatic stay of any civil proceedings, as this would unduly curtail the fundamental right to seek compensation of injured parties under EU law.

While I don’t read Dutch — and therefore cannot analyse the actual decision of the NL royal court — I trust that CDC summarised its findings accurately, even though the company clearly has a stake in this and thus a likely bias.

** According to Neelie Kroes’s speech, the cartelists initially met at the “Blue Salon” at a Hamburg hotel bar (my home town, coincidentally). I have a feeling it was this place — it’s always fun to visualise cartel activity in the flesh, just like “The Informant” did for moviegoers in 2009…:

Blauer Saal Kempinski Hamburg