Law and Courts III

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Citing Sutherland on Competition Law* the honourable Judge enumerated his five points on competition law in that i) the mere fact that an entity was typified as a section 21 company would not in itself mean that its activities were not subject to competition law rules; ii) economic activities that earned profits meant they may not be distributed to its members; iii) evidentiary factors pointed towards it being involved in business or non-business activities; iv) the entity’s central purpose might not be to achieve profit; v) the fundraising activities of charities were probably immune from the Competition Act 89 of 1998, however there may also present some strong arguments for subjecting these activities to competition law supervision. Cited by the honourable Judge was the adjudication pertaining to the restraint-of-trade disputes ruled by the Supreme Court of Appeals in the following principles - i) each agreement should be examined having regard to its own set of circumstances and ascertain whether the enforcement of the agreement was contrary to public policy in which case it would be unenforceable; ii) although public policy required agreements freely entered into were honoured, in addition it required generally that everyone should be free to seek fulfilment in the business and professional world; iii) an unreasonable restriction of a person's freedom of trade would probably also be contrary to public policy, should it be enforced; iv) acceptance of public policy as the criterion meant that when a party alleged that he was not bound by a restrictive condition to which he had agreed, he bore the onus of proving the enforcement of the condition was contrary to public policy. The Court would have to have regard to the circumstances prevailing at the time when requested to enforce the restriction. The Court held inter alia, the applicant had a business relationship cemented in the agreement with the first respondent and the activity performed in regard to the services rendered was an economic activity that might affect commerce. The lease of the equipment and the supply of the glasses was indicative of this. The court upheld the restraint against the first respondent, however the order did make provision for the respondent to apply for registration as a non-profit organisation with the relevant authorities and if granted, to continue with the prohibited business but with the legislatively prescribed charity objective
Whether the Charity entity was able to enforce a restraint of trade

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Vide - SA Sight Enhancement Initiative (NPO) v Benade & Others [2019] ZAFSHC 119; Sutherland, Competition Law in South Africa; ^Magna Alloys and Research (SA) (Pty) Ltd v Ellis 1984(4) SA 874 (A).
This case involved a distinctive dispute – an application by a non-profit organsiation for an order enforcing a restraint of trade covenant against a former employee who had commenced business in the same field for his own account. The applicant was established to provide low cost access to basic eye care in underserviced areas by conducting electronic eye screening. After screening the person would choose a frame, order the glasses from a specific supplier and at a fixed price that included free eye screening, frame, case and cloth, the customer would in the normal course, pay on lay-buy for the glasses in one to four instalments.The first respondent admitted in the opposing affidavit he continued business against the restraint of trade agreement and questioned whether the applicant possessed a proprietary interest and/or clear right that warranted the enforcement of the legal restraint. It was the first respondent’s case the applicant did indeed apply all its assets and income, however derived, to advance the objectives of the organisation. Nevertheless, SASEI was not permitted to restrain charity services by way of contract due to public policy. The major issue was if the protectable interest on the facts was business that generated an income or profit for charity, would the agreement be automatically illegal and unenforceable because the applicant was a non-profit?
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