IN THE NATIONAL CONSUMER TRIBUNAL
HELD AT CENTURION
Case No: NCT/2738/2011/101(1)(P) 

In The Matter Between:

MOBILE TELEPHONE NETWORKS (PTY) LTD   					           Applicant
 
and  
	
THE NATIONAL CONSUMER COMMISSION 					                    Respondent

DATE OF HEARING: 10 and 11 JUNE 2012
CORAM:  

(a)	TERBLANCHE D. (MS.) (PRESIDING MEMBER);
(b)	MASEKO J.M. (PROF.) (PANEL MEMBER)
(c)	BECK  P. (MS) (PANEL MEMBER)

JUDGEMENT AND REASONS
_____________________________________________________________________________________

1.	The Applicant is MOBILE TELEPHONE NETWORKS (PTY) LTD   (“MTN”), a private company with limited liability incorporated in South Africa, with registration number 1993/001436/07 and its physical address at 216 14th Avenue, Fairlands, Roodepoort. The Applicant is licensed as an electronic communications network operator in South Africa.

2.	The Respondent is the NATIONAL CONSUMER COMMISSION (“the Commission”); a public entity established in terms of section 85 of the Consumer Protection Act No. 68 of 2008 (“CPA”). 

3.	The Applicant brought an application in terms of section 101(1) of the CPA to the Tribunal for the review of a compliance notice issued against it by the Respondent.

4.	The compliance notice  alleges that the Applicant by its conduct, contravened:
•	Sections 14; 48; 54; 56 and 63 of the CPA;
•	Regulation 5; and
•	Section 120(d) of the CPA read with Regulation 44(3) especially sub-sub regulations (b); (c); (g); (h); (i); (k) and (r) of the CPA.

5.	This National Consumer Tribunal (“Tribunal”) has jurisdiction to hear section 101(1) review applications in terms of section 100 (1) of the CPA. This section provides that a person issued with a compliance notice in terms of section 100 may apply to the Tribunal in the prescribed manner and form for its review. 

6.	The Tribunal is a creature of statute, having been established in terms of the National Credit Act, Act 34 of 2005 (NCA), with its functions and powers as set out in the NCA, as amended by CPA. As such the Tribunal is obliged to operate within the confines of its empowering legislation and to observe (take judicial notice of) all the laws that bind the courts, the other two branches and three spheres of government; the population and other Tribunals.

7.	The Applicant based the review application on several grounds including a claim that the Applicant was the “wrong party”. The other review grounds are set out and discussed in detail further below. 

8.	This matter was initially set down and heard on 20 January 2012. The Tribunal directed on that date that it would then only consider one of the grounds for review raised by the Applicant namely that the NCC issued the compliance notice to the wrong party. The Tribunal issued its Ruling and reasons in relation to the ground of review that the Applicant was the wrong party and will not reiterate those in this judgment.   This judgment and its reasons follows the full hearing held into this matter on 10 and 11 July 2012 at the Tribunal’s offices in Centurion. 

THE HEARING

9.	On the day of the hearing the respondent’s representative, Mr. Thupayatlase, asserted that the respondent was not served with the notice of set down as a result of which, as he submitted; he only became aware of the hearing in the morning of the first day of the hearing. It was established on examination of a witness -, a Mr Peter Mashabela employed by the Respondent, that the notice of set down was received by the Respondent on 31 May 2012. He further testified to the effect that an email confirming receipt of the set down date for 10 and 11 July 2012 was sent to and received by the Tribunal on 15 June 2012. As it was clear that Respondent was not ready to proceed and the matter was set down for two days, the hearing was adjourned to resume on the 11th July 2012. Respondent undertook to file its heads of argument at commencement of the proceedings on 11 July 2012. 

10.	On 11 July 2012 Mr. Thupayatlase, who represented the Respondent on 10 July 2012 did not arrive. Instead a Mr. Thobejane, from Botha Massyn and Thobejane Attorneys appeared on behalf of Respondent. He submitted that, according to his instructions, Mr Thupayatlatse suffers from a heart condition and he (Thobejane) had been requested to appear before the Tribunal to request a postponement of the matter. He further submitted that he did not have instructions to proceed with the matter. The Applicant objected to the postponement on the basis that no formal application for a postponement, supported by affidavit, had been moved. The Applicant further submitted that the matter had been pending since February 2012 and that a further postponement would lead to severe prejudice to it. 

11.	The Tribunal refused the request for postponement as no formal application for postponement, supported by affidavit, was brought before the Tribunal to properly consider and arrive at a decision in relation thereto. The Tribunal directed the matter to proceed and afforded Respondent an opportunity to file its heads of argument by 16h00 on 18 July 2012. This was in the event that the Respondent wishes to place its position before the Tribunal. The Tribunal further directed that the Applicant should it so wish, to file its replying heads by 25 July 2012. The Respondent chose not to seize this opportunity to file its heads of argument.  This ruling is therefore based on the pleadings, written heads of argument by the Applicant filed and oral submissions made at the hearing. 

12.	The Applicant sought to have the compliance notice set aside on four grounds, namely that:

12.1	The Commission failed to consult with the regulatory authority that issued the license to the Applicant, a regulated entity, before issuing the compliance notice in terms of section 100(1) of the CPA as required in section 100(2) of the CPA. 

12.2	Investigation was illegally initiated in terms of section 71(2) of the CPA

12.3	There is no basis for the Commission concluding that Applicant has engaged in prohibited conduct in that - 

12.3.1	It could not reasonably have concluded, after concluding its investigation, that Applicant engaged in prohibited conduct as required in terms of section 73(1)(c); and 

12.3.2	The Compliance notice did not set out the non-compliance with the Act and the details of the nature and extent of the non-compliance as required in section 100(3) of the Act.

13.	The Applicant’s submissions in relation to its review grounds were that:  

13.1	The actions of the Commission were irrational in that it ignored a revised addendum in its compliance notice. The Commission had annexed the original addendum to the compliance notice, thus effectively ignoring the revised addendum which was already in its possession.

13.2	That the Commission acted arbitrarily in issuing the compliance notice in that at the time the compliance notice was issued, MTN’s agreement was compliant with the Act. According to the Applicant its assertions made in this regard, paragraphs 55 to 57 of MTN’s founding affidavit, stand uncontroverted by the Commission.

13.3	The Applicant submitted that the Commission did not consult with ICASA as required in terms of Section 100(2) of the Act which provides that before the Commission issues a compliance notice in terms of section 100(1) to a regulated entity, the commission must consult with the regulatory authority that issued a licence to that regulated entity. 

13.4	The compliance notice was issued pursuant to an unlawfully initiated investigation - the Commission had initiated an investigation in terms of section 72 of the Act into the information and communications technology sector. This, according to Applicant, is objectionable in law because it exceeds the power the Commission derives from the CPA. This power the Applicant contends is limited to initiating an investigation into prohibited conduct not an industry sector as the latter would make it too broad in its ambit. 

13.4.1	The compliance notice pursuant to such an investigation would run afoul of section 6(2)(f)(i) of PAJA in that it contravenes a law or is not authorised by the enabling legislation as evidenced by – 

13.4.1.1		Section 71(2) which provides that:

 “The Commission may directly initiate a complaint concerning an alleged prohibited conduct on its own motion ...” 

13.4.1.2		Section 72(1)(d) which provides that once the Commission has initiated an investigation, it may direct an inspector to investigate the complaint as quickly as practicable. 

13.4.1.3		Section 102(1) of the Act which provides that that at any time during an investigation being conducted in terms of section 72(1)(d), the Commission may issue a summons. 

13.4.1.4		The power of summons in section 102 is extraordinarily wide, and amounts to the Commission having power to call anybody to answer questions regarding the subject matter of the investigation. This power is intrusive and invasive, while remaining activated by the investigation initiated. 

13.4.1.5		And section 103(1)(b) provides that a Judge, or in some cases a magistrate, may issue a warrant if there are reasonable grounds to believe that anything connected with an investigation is in the possession of or under the control of a person who is on the relevant premises.  Again an extraordinary far reaching power to go in and search for documents, with the only limit being that the document must be relevant to the investigation. 

13.4.1.6		The above illustrates how the Commission’s powers to summon people to answer questions, to search their premises are limited by the investigation. And what that means to the Tribunal, is that the initiated investigation must be a circumscribed one. It must also be a narrow one; because otherwise these extraordinary far reaching powers would apply with a sweep and a scope of ambit that would be untenable.

13.4.1.7		In the Woodlands-case, the Supreme Court of Appeal held that the Competition Commission could not initiate an investigation into the milk industry which it sought to do. It had in its limited investigation to indicate who was being investigated. If you cannot investigate the milk sector in the competition context it follows that you also cannot investigate the ICT sector in the CPA context. 

14.	Respondent’s Submissions

14.1	From its answering affidavit, the Respondent asserted, in summary, that -  

14.1.1	The Compliance Notice was based on a consumer agreement that applied at the time leading to the compliance notice.

14.1.2	The Compliance Notice was not issued subsequent to an invalid investigation.

14.1.3	The NCT does not possess administrative review powers and can only confirm, amend or set aside a compliance notice and this does not constitute administrative review.

15.	At the hearing the Applicant repeatedly urged the Tribunal to consider the lack of consultation with ICASA as the mainstay of its case for setting aside the compliance notice. The Applicant also urged this Tribunal to simply adopt the findings and the rationale in the Vodacom-matter where similarly to the Applicant Vodacom challenged a compliance notice issued against it by the Commission on the basis that the Commission did not consult with the relevant regulatory authority. 

16.	However a failure on the part of this Tribunal, to consider the unique and specific facts and circumstances presented in each case would result in an injustice. However tempting as the invitation from Applicant is, the Tribunal has considered the application before it on its own merits. 

Factual Background

17.	MTN is a regulated entity, regulated by ICASA. 

18.	The Commission derives its powers from the CPA and those powers are circumscribed by the CPA, including the powers in respect of compliance notices. Section 85 establishes the Commission and section 100 sets out and circumscribes its powers generally and in respect of compliance notices 

19.	The chronological occurrence of events is important in determining the issues to be decided by the Tribunal. The relevant events and dates that follow are undisputed -  

19.1	During April 2011 the Commission sent an email to MTN indicating that it (Commission) had intended conducting an investigation into the information and communication technology sector.

19.2	MTN furnished the Commission with a copy of what was then its existing (consumer) subscriber agreement together with the addendum on 13 May 2011. 

19.3	From May until the end of August 2011, a number of meetings were held between MTN and the Commission aimed at ensuring that the MTN subscriber agreement  complied with the CPA. There is a dispute as to whether some of those were “meetings” or “workshops”. It is irrelevant to the determination of the issues to be decided between the parties which of these would qualify as a “meeting” or “workshop”.

19.4	A revised addendum was developed by MTN. 

19.5	MTN SP then issued that revised addendum and instructed all of its dealers to implement the revised addendum with immediate effect via email on the 5th of August 2011. This addendum was issued by one Mr Madzonga. It informed all of MTN SP outlets to rollout the document that has been dubbed the “revised addendum” with immediate effect. 

19.6	MTN notified the Commission that the revised addendum had been issued via a letter written by MTN on the 10th of August 2011 to the Commission.

19.7	Following a meeting of the 4th of August 2011 and in line with its undertaking at that meeting; MTN SP, on 5 August 2011, issued the revised addendum to its entire dealer network and stores. The Commission did not dispute this assertion. 

19.8	The Commission met with the Applicant’s Regulator, ICASA, on 22 August 2011 purportedly to consult with the latter in terms of section 100 of the Act.

19.9	On the 24th of August 2011, the Commission issued the compliance notice against MTN. In it, the Commission alleged that the original (unrevised) subscriber agreement was not compliant with the Act. 

19.10	A copy of the original addendum was annexed to the compliance notice annexed and not the revised addendum. 

20.	Certain actions by the Commission are subject to review by the Tribunal in terms of section 101 of the CPA as it constitutes administrative action. This was decided and fully set forth in the Tribunal decisions in City of Johannesburg vs NCC, Vodacom vs NCC and Multichoice vs NCC.

21.	The South African Constitution guarantees just administrative action. What that constitutes has been embodied in the Public Administration of Justice Act, 3 of 2000 (“PAJA”) as a result, administrative action must be consistent with the principles enunciated in PAJA. 

22.	Compliance notices are regulated in sections 73, 100 and 101 of the CPA. Section 73 provides that the Commission may issue a compliance notice after having concluded an investigation into prohibited conduct. This is followed by section 100 which pertinently in subsection (1) provides that:

“subject to subsection (2), the Commission may issue a compliance notice in the prescribed form to a person or association of persons whom the Commission on reasonable grounds believes has engaged in prohibited conduct” and section 100(2) which provides that “Before issuing a Compliance Notice in terms of subsection (1) to a regulated entity, the Commission must consult with the Regulatory authority that issued a license to that regulated entity.” 

Section 100(3) prescribes the contents of the compliance notice while section 101 provides for the right of review to a party against whom the compliance notice has been issued.

ANALYSIS AND APPLICATION OF LAW TO FACTS 

23.	The first question that stands to be considered by the Tribunal is whether MTN engaged in prohibited conduct. 

24.	On the pleadings before the Tribunal MTN states in Para 49 to Para 53 of the founding affidavit that section 100 of the Act permits a compliance notice to be issued against a person whom the Commission reasonably believes has engaged in prohibited conduct. These assertions have not been dealt with by the Commission at all albeit the Commission filed a lengthy answering affidavit dealing extensively with all but these allegations. In terms of the Tribunal rules, rule 13(4)(c) provides that  if an answering affidavit denies an averment in a founding affidavit it must set out the “grounds for such denial.” The mere denial of the NCC does not comply with the rule. On this basis alone the compliance notice stands to be set aside as Section 101(1) pertinently requires that

 “… the Commission may issue a compliance notice in the prescribed form to a person or association of persons whom the Commission on reasonable grounds believes has engaged in prohibited conduct” (emphasis added).

25.	The compelling nature and content of the requirement to consult in terms of section 100(2) of the CPA has been dealt with extensively in the Multichoice and Vodacom matters before the Tribunal. It is common cause that the commission chose to issue the compliance notice against MTN and not MTN SP and that MTN is a regulated entity regulated by ICASA. The fact of MTN being regulated triggers the obligation in section 100(2) for the Commission to consult with ICASA prior to issuing the compliance notice. It appears from the record and hearing that there was only one meeting between the Commission and ICASA relating to MTN and the compliance notice. That meeting was held on 22 August 2011.  The compliance notice was issued a mere two days later.

26.	At the meeting the Commissioner indicated that they had various consultations with the major players within the ICT sector namely Cell C, Vodacom, Telkom, MTN and Neotel, and in the broadcasting space with Multichoice and Top TV. There was a discussion of the five major players and an assessment of consumer contracts and analyses was undertaken with respect to four of the five major players mentioned by the Commission that – 

26.1	none of these entities were compliant with the CPA;

26.2	written commitments from these entities were received to amend their contracts with different timelines;

26.3	in order to ensure that the commitment is firm and binding the Commission had to ensure that the entities signed consent orders;

26.4	The entities indicated their unwillingness to sign consent orders (with the exception of Neotel); 

26.5	Discussions about compliance notices for the four unwilling to sign consent orders.

26.6	The Commissioner had indicated to ICASA that they were then still in discussions with Multichoice and Top TV on their consumer contracts with no further evident discussion;

26.7	At the end of the discussion between ICASA and the Commission, it is stated (from page L)  that:

 “… in conclusion the Commissioner requested to be supplied with copies of the licences of the operators as they would assist the commission to finalise the process as these are critical for arguments with the entities”.  

27.	The Commission handed ICASA a compliance notice that the Commission had intended issuing against MTN.  MTN argues that such action was contrary to the intention to consult and served merely as information to ICASA. MTN further argued that at that time MTN had already amended the offending addendum. MTN further argued that at the time of the NCC meeting ICASA, the subscriber agreement was already compliant with the CPA. The requirement of consultation and the meaning and intent had been extensively dealt with in previous cases before the Tribunal. The Tribunal pointed out in the Multichoice-matter that consultation is usually understood as a meeting or conference at which discussions takes place, ideas are exchanged and advice or guidance is sought and tendered. In addition the consulting party must keep an open and receptive mind, in other words the consulting party must not approach the matter with its mind already made up. 

28.	This Tribunal is satisfied that the Commission informed rather than consulted with ICASA on the issuance of the Compliance Notices (including the one in this case) because:-

28.1	 the compliance notices were drafted before the meeting and issued a mere two days after the meeting; and

28.2	The Commission issued these compliance orders without engaging with ICASA or obtaining any advise it may have had. 

28.3	In the result there was no compliance with the peremptory requirement in section 100(2) and the compliance notice stands to be set aside. 

29.	We accordingly make the following order: 

29.1	The compliance notice issued by the Respondent is hereby cancelled.
29.2	We make no order as to costs. 

Handed down on 17 September 2012.
[signed]	
Ms D Terblanche 							  
Presiding Member							 
Prof J Maseko, Member and Ms Penelope Beck, Member, concurring