Breach of competition law sparks collective redress claims in South Africa

To date there have not been any successful private enforcement or collective redress claims in South Africa arising from breaches of competition law.  However, over the last few years the Supreme Court of Appeal and the Constitutional Court, in cases against several bread manufacturers - the Pioneer Foods cases¹ –have opened the door in South Africa to class actions in all forms.

The Pioneer Foods cases arose from the competition law complaints against bread manufacturers for price fixing and market allocation. Representatives of both a class of consumers of bread and a class of distributors of bread, brought an application for damages arising from the increased price of bread resulting from the cartel conduct.

The courts in South Africa ultimately remitted the applications for certification back to the High Court, where they have not yet been heard. Therefore, as yet, there are no decisions on the merits, including the determination of the precise cause of action for such a class action. However, the Supreme Court of Appeal and Constitutional Court did provide useful guidelines on certification and causes of action. These cases represent an important first step for class action development in South Africa. They are the first cases in South Africa to recognise the use of class actions where there has been a breach of common law rights or statutory duties.

We have since seen several other class actions being launched in South Africa, the most prominent being class actions launched against the major mines by large groups of mineworkers suffering from silicosis, a degenerative lung disease arising from exposure to silica dust during mining.

The Pioneer Foods cases may also be the catalyst for the emergence of individual private enforcement actions as a result of breaches of competition law in South Africa. The only private enforcement case brought in South Africa to date was Nationwide Airlines’ claim against the national carrier, South African Airways, for damages suffered as a result of an abuse of dominance – but this case settled out of court. Several municipalities and other organisations have publically indicated their intention to claim damages arising from arguably the most famous cartel to date in South Africa – the rigging of bids by numerous construction companies for the 2010 Soccer World Cup stadiums and many other projects.

The extent to which South African individual and collective private enforcement cases arising from anticompetitive conduct will take off remains to be seen, but claims arising from competition law are clearly at the forefront of developing collective redress jurisprudence in the country.