By Andrew Smith and Emmylou Wewege
* Various arguments in this note were developed from consultations with Wim Trengove SC, whose input was invaluable.
The Competition Amendment Bill (“the Bill”) seeks to amend the Competition Act 89 of 1998 by introducing various new provisions. We consider only those provisions which introduce criminal liability for any director or manager of a firm which is engaged in hard-core cartel conduct. Aspects of these provisions of the Bill appear to be unconstitutional.
The constitutional problems were acknowledged by President Motlanthe who, earlier this year, rather than assenting to the Bill, referred it back to Parliament due to concerns about its constitutional validity. The Bill was considered by Parliamentary committees but was referred back to the President unchanged.
The President now has a difficult decision to make. In terms of section 79(4) of the Constitution he may assent to the Bill, in which case it becomes an Act. He may also decide to refer it to the Constitutional Court due to his concerns about its constitutional validity.
The Bill provides that, if a director or manager is found guilty of engaging in or knowingly acquiescing in prohibited conduct (which involves hard-core cartel behaviour), he or she may be imprisoned for up to 10 years or have to pay a fine of up to R500 000, (or both). In our view, three aspects of this provision are possibly unconstitutional.
i) A reverse onus
The onus is on the State to prove all the elements of a crime beyond a reasonable doubt. Section 73A(5) of the Bill states that a finding by the Competition Tribunal of prohibited conduct by a firm (or where a firm effectively admits to such conduct by entering into a consent order agreement) is prima facie proof in a criminal trial of a director or manager of that firm, that the prohibited conduct has occurred. This creates a “reverse onus” as the State no longer has to prove this element of the crime.
A reverse onus is not automatically unconstitutional. There is a two stage test:
First, does the provision violate the presumption of innocence and the requirement that the accused's guilt be proved beyond reasonable doubt? This is so if the provision creates the risk of conviction of the accused despite the existence of a reasonable doubt about his guilt. Section 73A(5) creates such a risk because an accused may be convicted despite the absence of any evidence of the fact that the firm had engaged in a prohibited practice.
Secondly, is it a justifiable limitation in terms of section 36(1) of the Constitution? The principal considerations are the purpose of the reverse onus provision and the risk it creates of the conviction of an accused despite the existence of a reasonable doubt. The apparent purpose of the reverse onus provision in this case is to ensure that the finding of prohibited conduct occurs in the Tribunal rather than in the criminal courts. This is, however, not a legitimate purpose because an accused is entitled, in terms of section 35(3) of the Constitution, to a trial "before an ordinary court", which the Tribunal and the Competition Appeal Court (“CAC”) are not. The risk of conviction despite the existence of a reasonable doubt is real because the accused may not have been party to the proceedings in the Tribunal or the CAC which determined that the firm had engaged in the prohibited practice. Section 73A(5) is accordingly not a justifiable limitation of the presumption of innocence.
ii) Prohibition on defence funding
Section 73A(6)(b) prevents a company from financially assisting in the defence of an employee charged in terms of this section unless the prosecution is abandoned or the director or manager is acquitted. This is a clear and unjustifiable violation of the right to a fair trial. Its purpose appears vindictive and is a means which is wholly inappropriate to achieve its aim. It unjustifiably violates the accused’s right to prepare his or her defence and to choose his or her legal representative - which are rights entrenched in section 35 of the Constitution. This section also presumes guilt rather than innocence. This provision is, as a result, clearly unconstitutional.
iii) Prohibition on funding of a fine
Section 73A(6)(a) prohibits a firm from assisting in the payment of any fine imposed in terms of this section. Coupled with section 73A(6)(b) this section shows the excessive means being employed to prevent cartel conduct. Such means may not be constitutional.
We believe it would be preferable for the President to refer the Bill to the Constitutional Court. This would bring clarity and avoid unnecessary litigation. If it is not referred, we anticipate various constitutional challenges to the amended Act which will prevent it from being implemented while that litigation unfolds.