The Competition Tribunal (“Tribunal”) has dismissed an application for interim relief brought by Nothemba Mlonzi and Econ Oil & Energy (Pty) Ltd (“the Applicants”) against Eskom Holdings SOC Limited (“Eskom”), having concluded that the Applicants have not made out a case for interim relief.
 
Econ Oil had supplied Eskom with fuel oil since 2003. In 2018, Eskom investigated certain allegations of improper and unethical conduct against Econ Oil. Following its investigation, Eskom terminated the supply agreement in place between it and Econ Oil and de-registered Econ Oil as a supplier to Eskom for a period of 10 years.  
 
The Applicants subsequently applied to the Tribunal for interim relief to prohibit Eskom from giving effect to this decision. They asked for an interim order interdicting and restraining Eskom from abusing its dominance by “refusing to deal” with Econ Oil and permitting Econ Oil to participate in Eskom’s tenders for the supply of fuel oil to Eskom power stations.  Eskom opposed the application.
 
In exercising its discretion to grant the interim relief, the Tribunal must be satisfied that it is “reasonable and just” to do so. When deciding what is reasonable and just, the Tribunal considers the following statutory requirements: (i) whether there is prima facie evidence relating to the alleged prohibited practice; (ii) the need to prevent serious or irreparable damage to the Applicant; and (iii) the balance of convenience must favour the granting of the interim interdict. 
 
Evidence of a prohibited practice
 
The Applicants alleged that through Eskom’s conduct they have been impeded or prevented from entering into, participating or expanding within the market for the supply of fuel oil to Eskom (a dominant buyer of fuel oil) in contravention of section 8(1)(c) of the Competition Act (“the Act”). The Applicants also alleged discrimination by Eskom on the grounds of race and gender.
 
This section of the Act prohibits a dominant firm from engaging in an exclusionary act “if the anti-competitive effect of that act outweighs its technological, efficiency or other pro-competitive gain”. An exclusionary act is defined as an act that impedes or prevents a firm from entering into, participating in or expanding within a market.
 
Eskom, in opposing the Applicants’ claims argued that: (i) it was not possible to regard Eskom’s conduct as exclusionary given the impropriety with which Econ Oil is accused; (ii) Econ Oil cannot argue that it has been prevented from entering, participating or expanding within a market because it claims on its website that it has multiple customers; and (iii) Eskom’s decision to de-register Econ Oil as a supplier was based on justifiable grounds.
 
The Tribunal considered whether Econ Oil’s exclusion as a supplier to Eskom is prima facie evidence of a prohibited practice i.e. an exclusionary act, where the anti-competitive effect of that act outweighs its technological, efficiency or other pro-competitive gain. The Tribunal found no prima facie evidence of an exclusionary act in contravention of section 8(1)(c) of the Act.
 
It is the Tribunal’s view that the Applicants have not demonstrated any anti-competitive effects from Eskom’s exclusion of Econ Oil as a supplier to Eskom. In addition, the Tribunal cannot find that Eskom was not justified in de-registering Econ Oil as a supplier for its alleged involvement in improper and unethical business practices.
 
“… it is not possible to conclude that there is no ‘proper explanation’ for Eskom’s conduct or that the reasons it has provided lack objective rationality or justification. We also cannot find that the decision to de-register Econ Oil was motivated by a desire to entrench Eskom’s dominant position or to enable it to leverage its market power at the expense of Econ Oil.”
 
The Tribunal also found the Applicants’ claims of discrimination by Eskom on the grounds of race and gender, to be speculative.
 
The need to prevent serious or irreparable harm
 
The Tribunal is of the view that it is not necessary to reach definitive findings in this regard given its conclusion that no prima facie evidence of a prohibited practice has been established.
 
Balance of convenience
 
The balance of convenience involves weighing the prejudice that will be suffered by the Applicants (if the interim relief is not granted) against the prejudice to Eskom (if the application is successful). The Tribunal considered that the Applicants’ ability to compete in the market will be severely constrained by the loss of Eskom as a customer. However, this must be balanced with the prejudice suffered by Eskom which as a public entity has a constitutional and legal obligation in the way that it engages with suppliers.
 
The Tribunal is unable to hold in the circumstances of the case, where a strong justification is given as to why an organ of State refuses to engage with a supplier, that the balance of convenience nevertheless justifies the continuation of that relationship. The application for interim relief was accordingly dismissed with no order as to costs.
 
A public version of the Tribunal’s reasons will be available on the Tribunal’s website at www.comptrib.co.za once any confidential information in the reasons has been finalised.