Helen Kean and Albertus van Niekerk
During January 2018 Econex* (instructed by Hogan Lovells) provided expert economic testimony before the Competition Tribunal in respect of a proposed merger between Timrite (Pty) Ltd and the Mining Bag Division of Tufbag (Pty) Ltd (IM100Jul17), two mining related companies. This merger was approved by the Tribunal on 19 February, subject to certain conditions. Whilst the economics of the case will be of focus in a forthcoming article, this blog discusses our impression of a novel process that was introduced by Tribunal Chair Norman Manoim during this particular proceeding – the use of a ‘hot tub’ or ‘concurrent evidence’ hearing. While there have been several ‘hot tub’ meetings between experts prior to Tribunal hearings in recent years, this was the first Tribunal hearing where the ‘hot tub’ formed part of the proceedings. In these types of hearings, the experts provide evidence concurrently (as opposed to sequentially). Whilst hot tub hearings are not new internationally, this was a first for South Africa and one which may significantly impact on the role of expert evidence in competition proceedings.
In recent years the role of an expert witness has been hotly debated in South Africa. In the excessive pricing case against Sasol Chemical Industries (2015) (pp. 89-90) Judge Dennis Davis set out the responsibilities of an expert witness. These responsibilities are also in line with international requirements. As is often quoted in South African proceedings, the Australian Federal Court discusses that “An expert witness has an overriding duty to assist the tribunal on matters relevant to the experts’ area of expertise. An expert witness is not an advocate for a party even when giving testimony that is necessarily evaluative rather than inferential. Finally, the expert witnesses’ paramount duty is to the tribunal and not to the person retaining the expert.”
Aligned with the responsibilities of an expert, the South African Competition Commission and Tribunal have in recent years often required pre-hearing ‘hot tub’ meetings. These are meetings held between opposing expert economists (or other experts) in a case, wherein they are requested to independently discuss and document commonalities or points of agreement in their approaches. This is intended to speed up the actual hearings by focusing the discussion on the contestable points and thereby increasing the efficiency with which the experts are able to assist the Tribunal.
Following the introduction of ‘hot tub’ pre-hearing meetings, the use of ‘hot tub’ hearings have now also been introduced, with the Timrite-Tufbag merger being the first in this respect. In terms of procedure, the experts were allowed to open with a 15-minute presentation of their key points, with the remainder of the experts’ testimony taking the form of direct discussion between the two experts. To facilitate this process of concurrent evidence, a specific pre-hearing meeting was held in order to establish and agree on the main points of discussion. These items were then raised by the Tribunal in the hearing, as an opening to each discussion point. Each point was then debated between the two experts, with each requested to respond to the points raised by the other, and with allowance for direct questions, both between the experts, and also from the Tribunal members. Following this, examination by Counsel was allowed, but the duration was significantly lessened due to the fact that the key points and views were already rapidly and explicitly covered through concurrent evidence. An additional advantage of the proceedings in this instance was that the experts were allowed to be assisted with documentation by their team, further increasing the efficiency with which key evidence could be raised and discussed.
Beyond the general efficiency gains in this instance, this case was well suited to the use of concurrent evidence, given that the frameworks of analysis by the experts differed fundamentally. Hence the traditional proceedings may have left the Tribunal with two vastly different testimonies to assess. In this context, the proceedings mandated both experts to deal with all relevant issues, with each responding to the other on all points; again, eliciting the most relevant facts for the Tribunal’s assessment.
The process of providing evidence concurrently increases the value added by expert economists in a hearing in various ways. In our view, it firstly encourages the experts to crystalise the main points of their arguments clearly and concisely. Since each expert knows that the other expert would be able to expose an inappropriate answer immediately, or reinforce an appropriate one, the evidence generally proceeds directly to the critical points of difference. This can aid the Tribunal (or court) in understanding a point more clearly before moving on to another point. Secondly, it allows the economists to directly test one another’s assumptions on a more technical level than would generally be possible through traditional cross-examination. This aids in one economist being able to correct any “misinformation” provided by the opposing expert economist that may not be picked up by the cross-examiner, particularly where it relates to technical, yet important, details. Concurrent evidence also allows this to be done in “real time” before the Tribunal (or court). Third, all of the evidence concerning each issue is dealt with in a logical progression and can be found in one place in the transcript.
Looking forward, it is our view that the use of concurrent evidence hearings may certainly be beneficial, although their applicability should be assessed on a case by case basis. This is a space worth watching.
*Helen Kean provided expert testimony in this case, assisted by Albertus van Niekerk and Wawa Nkosi
Nothing in this publication should be construed as advice from any employee of Econex and should be seen as general summaries of developments or principles of interest that may not apply to specific circumstances.