MAKARAU
JA:
[1]
This is an appeal against the judgment of the High Court, absolving
the respondent from the instance, at the close of the appellant's
case as plaintiff in that court.
The
Facts
[2]
The appellant is a statutory body set up in terms of section 4 of the
Competition Act [Chapter 14:28], (“the Act”), its functions as
set out in section 5 of the Act are as follows:
(a)
to encourage and promote competition in all sectors of the economy;
and
(b)
to reduce barriers to entry into any sector of the economy; and
(c)
to investigate, discourage and prevent restrictive practices; and
(d)
to study trends towards increased economic concentration, with a view
to the investigation of monopoly situations and the prevention of
such situations, where they are contrary to the public interest; and
(e)
to advise the Minister in regard to a number of issues that are
listed in the Act.”
[3]
The respondent is in the business of providing internet services. So
is Africa Online (Private) Limited, (“Africa Online”). The two
target different segments of the market, with Africa Online providing
its services mainly to large corporates whilst the respondent caters
for the lower end of the market.
[4]
On a date that is not given in the evidence, the respondent made
approaches to the appellant, seeking information and advice on the
necessary steps to take in merging with Africa Online. Such approach
was not followed up with any notification in terms of the Act.
[5]
An anonymous letter was written to the appellant informing it of an
alleged merger between the respondent and Africa Online. There is a
dispute as to whether or not when the appellant received the
anonymous letter, it had commenced investigations into the alleged
merger. For the purposes of this judgment, the dispute is of no
import. What is common cause is that immediately after, or
immediately before receiving the letter, the appellant commenced its
investigation into the alleged merger.
[6]
The investigation entailed and included visiting the offices of the
respondent in Mutare and Bulawayo and conducting a raid at the Harare
offices. The investigations revealed that the respondent and the
appellant shared directors, offices, personnel and strategies.
[7]
On the basis of these findings, the appellant issued summons against
the respondent in the court a quo on 9 September 2013, principally
claiming an order declaring the existence of a notifiable merger
between the respondent and Africa Online. The appellant also prayed
for an order compelling the respondent to comply with the provisions
of the Act requiring the respondent to notify the appellant of the
merger and to pay the requisite fee.
[8]
The suit was defended. In its plea, the respondent denied having
merged with Africa Online as alleged and put the appellant to the
proof thereof. In consequence thereof, it denied being under any
legal duty to notify the appellant of the merger as demanded.
[9]
The matter proceeded to trial on two issues. These were captured in
the joint pre-trial conference minute as firstly, whether or the
defendant merged with Africa Online, and secondly, if the two
entities had merged, whether or not such constitutes a notifiable
merger in terms of the Act and the relevant regulations.
[10]
After leading evidence from two witnesses, the appellant closed its
case. Thereafter, the court a quo absolved the respondent from the
instance as stated above, finding in its final analysis that there
was no evidence before it, upon which a reasonable court might give
judgment against the defendant.
The
Appeal
[11]
Aggrieved by the decision, the appellant noted this appeal, raising
seven grounds of appeal.
[12]
In the main, the appellant attacks the findings of the court a quo as
an improper consideration of the matter that was before it in that it
took into account extraneous factors that are not provided for in the
law. In particular, it was contended in the grounds of appeal, that
the court a quo expected the appellant to lead evidence on issues
that are not required to be proved by the law and in the absence of
such unnecessary evidence, erroneously absolved the respondent from
the instance.
The
Law
[13]
The law on when a court may grant absolution from the instance at the
close of the plaintiff's case is settled. (See Supreme Service
Station (1969) (Private) Limited v Fox & Goodridge Limited 1971
(1) ZLR 1 (A) and United Air Charters (Private) Limited v Jarman 1994
(2) ZLR 341 (S). The court granting absolution must be satisfied that
there is no evidence before it upon which a reasonable court might
find for the plaintiff.
[14]
Expressed differently, the court considering an application for
absolution from the instance must ask itself if there is no evidence
at all on each and every essential averment that the plaintiff must
make to sustain the cause of action. If there is some evidence on all
the essential averments, absolution should not be granted. If there
is evidence on some but not on all the essential averments,
absolution may be granted, for in that instance, the plaintiff will
not be able to sustain and perfect its cause of action. This is so
because an application for absolution from the instance stands on
pretty much the same footing as an application for the discharge of
an accused person at the close of the State case albeit on a lower
threshold of the burden of proof.
[15]
It follows then that a court granting absolution must be clear on the
essential averments that a plaintiff has to make to sustain the cause
of action.
[16]
Where the cause of action as in casu, is based on the provisions of a
statute, the essential elements of the cause of action are to be
found within the four corners of the statute and not anywhere else.
Analysis
[17]
The appellant's cause of action is an alleged merger between the
respondent and Africa Online. It is based on the provisions of the
Competition Act which in section 2 defines a merger as “…the
direct or indirect acquisition or establishment of a controlling
interest by one or more persons in the whole or part of the business
of a competitor, supplier, customer or other person ….”
[18]
Thus, not in any order of importance or sequence, the averments
necessary to sustain an action where a merger as defined in the
Competition Act is alleged are:-
(a)
the acquisition or establishment of an interest in the business of
another;
(b)
by the respondent;
(c)
which interest enables the respondent to control the assets or
activities of that other.
[19]
For a court to grant absolution from the instance in a suit in which
a merger under the Act is alleged, it must therefore be satisfied
that there is no evidence before it showing that the respondent
acquired or established an interest in the business of another which
interest enables it to control the assets or activities of that
other.
[120]
In finding that the appellant had not placed prima facie evidence
before the court to sustain its cause of action, the court a quo
agreed with the respondent's submission that the appellant had
failed to lead evidence showing that the respondent had acquired
majority shareholding in Africa Online. It also found that the
respondent and Africa Online did not fish from the same pond as they
had different target markets; that there was no evidence placed
before it that a monopoly had been created and competition stifled
and that there was no evidence of a controlling interest in the sense
of one entity having the upper hand or the wherewithal to dictate to
the other or manipulate the market.
[21]
With respect, the court a quo took into consideration factors
extraneous when assessing whether or not the appellant had adduced
prima facie evidence to sustain the cause of action that it had
brought against the respondent. It did not make reference to or seek
to be guided by the provisions of the statute providing for the cause
of action.
[22]
For instance, the court a quo found that the respondent and Africa
Online did not fish from the same point. This was an unnecessary
finding to make. In the suit a quo, it was not necessary for the
appellant to aver and prove that the respondent and Africa Online
were not in competition for the same market. This is because a merger
in terms of the Competition Act can be established between any
persons who may not be in any recognised relationship. It was
therefore not necessary that the appellant lead evidence to show that
the respondent and Africa shared the same market as this is not a
requirement of the law.
[23]
Secondly, the court a quo granted absolution from the instance on the
added basis that there was no evidence placed before it that a
monopoly had been created and competition stifled. The law does not
require that a monopoly be created as a result of the merger and that
there be a stifling of competition. There was therefore no need for
the appellant to lead evidence tending to show the creation of a
monopoly and the stifling of competition following the alleged
merger. Absence of such evidence was therefore an improper basis to
ground the order that the court made.
[24]
Lastly, whilst the court a quo correctly identified the need for the
appellant to lead evidence on the establishment of an interest in
Africa Online that would enable it to control the assets or
activities of Africa Online, it set the threshold of proof at a level
higher than is stipulated in the law. The court required the
appellant to lead evidence showing that as a result of the alleged
merger, the respondent now had the upper hand and could dictate terms
to Africa Online and also enable it to manipulate the market. This is
not a requirement of the law.
[25]
On the basis of the above, I am satisfied that the court a quo erred
and misdirected itself in granting absolution from the instance,
after taking into consideration extraneous factors that were not
necessary to be proven for the appellant to sustain its cause of
action. The decision of the court a quo cannot stand and must be
vacated.
[26]
Applying the test that I have set out in paragraphs 18 and 19 above
to the facts of this matter, I am satisfied that the appellant
adduced sufficient evidence before the court a quo to sustain its
cause of action. It is therefore my finding that the appellant
established a prima facie case for the respondent to rebut if it is
to avoid judgment against it.
[27]
In view of the success of the appeal, costs of this appeal will
follow the cause as prayed.
[28]
In the result I make the following order:
(a)
The appeal succeeds with costs.
(b)
The judgment of the court a quo is set aside and substituted with the
following:
“The
application for absolution from the instance is hereby dismissed.”
(c)
The matter is remitted to the court a quo for continuation of trial.
GWAUNZA
DCJ : I agree
BHUNU
JA: I agree
Chihambakwe,
Mutizwa & Partners, appellants' legal practitioners
Munangati
& Associates, respondent's legal practitioners
