The passive attendee in meetings at which potentially collusive conduct takes place has recently been considered further and developed by the South African Competition Appeal Court in the ‘bicycles case’.
Previously addressed by the South African Competition Tribunal in DPI Plastics Pipes (2012), the Tribunal concluded that an attendee simply cannot stay silent nor adopt an ambiguous stance if the content of discussion between competitors turns to potential co-operation, conspiracy or collusion. There is an obligation to overtly disagree and distance oneself from the conduct discussed or proposed, even if one has been innocently lured into such discussions. A failure to do so will lead to an inference that the competitor concerned formed part of the unlawful agreement.
In the Omnico Cool Heat ‘bicycles case’ the Appeal Court dismissed two companies’ appeal against findings of a contravention and consequent fine imposed for their participation in a cartel affecting pricing in bicycle manufacturing and supplies, rejecting arguments that the companies had distanced themselves from the anti-competitive conduct.
The Competition Tribunal found 21 bicycle and bicycle part manufacturers and suppliers guilty of indirect price fixing. The Competition Tribunal concluded that these manufacturers and suppliers agreed to collectively raise their recommended retail prices in order to boost their retail profit margins. Approximately 60 industry wholesalers and retailers attended a September 2008 meeting. Agendas for the meeting were distributed in advance and minutes from the meeting were subsequently posted on social media available to the cycling community. The key issue was whether silent attendance or participation without protest could be regarded as cartel behaviour.
The Appeal Court discussed and endorsed the European competition jurisprudence on the principle of passive attendance at collusive meetings. The court found that there is a clear duty to speak out and establish a distance from any potential cartel discussion or conduct. Where attendees receive advance notice of discussion on competitive sensitive matters between competitors, as there was in this case with agenda items spelled out, even greater caution is to be exercised in attending any such meeting.
In a noteworthy development, the Appeal Court also confirmed that, given ‘the complex and clandestine nature’ of cartel behaviour, the correct approach of the competition authorities will be to examine the cumulative effect of the conduct, both passive and active, in its context to determine whether it constitutes cartel behaviour. That effect, taken as a whole, will be evaluated and can be equally compelling as the much sought after ‘smoking gun’ in cartel investigations.
It is therefore clear than a party cannot silently go along for the ride should the track prove to be off-course, but rather an attendee must call a stop to the journey and make it clear that it does not agree with the conduct proposed in order to successfully defend claims of participation in cartel activity.