Insights from the Top | Law Firm Leadership: Anthony Norton
David Teece speaks with Anthony Norton, a leading competition lawyer and cofounder of Nortons Inc. They discuss important trends in competition law in South Africa, the firm’s philosophy on pro bono work, and efforts to support constitutional democracy in South Africa.
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Transcript
[00:00:39] David Teece: Hello, my name is David Teece. I'm executive chairman of Berkeley Research Group and a professor in the business school at the University of California, Berkeley.
In this episode, it's my pleasure to speak with Anthony Norton. He's a cofounder and director of Norton's Inc., which is a premier boutique law firm headquartered in South Africa.
Today we're going to be talking about his firm, but more importantly about the future of competition law in South Africa and how boutique firms like Norton's are navigating today's challenging environment.
First of all, good morning or good afternoon, Anthony. How are you?
[00:01:18] Anthony Norton: I'm very well, thank you. And you, David?
[00:01:21] Teece: Well, I'm in London today, not in my normal California office, and as I reflect on the past, I think it's over three decades since South Africa got its Competition Act in 1989. I understand that, Anthony, you were the first legal practitioner to appear before the Competition Appeals Court. I think that means that you have a unique perspective on the evolution of competition law and the enforcement process in South Africa. I'd love to hear from you how things are different from what they were back at the beginning, and then we'll move on to talk about how they might evolve from here on out.
[00:02:00] Norton: I was very fortunate at the outset, way back in 1989, to be invited to a course in the US in DC, which was run by the Department of Justice. That was a sort of two-week course for South African enforcement agencies to get them started when the new Competition Act was in its infancy and was getting going, and there weren't really any lawyers from the private sector involved. And I was one of the few to be invited to join. And I think my interest in competition law started then. There were some great US lawyers and economists at that course, and that really stimulated my interest. And South African competition law really got going from then. I think to be fair, we were playing catchup with developed economies like the US, like Europe, and competition law really was in its infancy in those days.
A lot has changed since then. I think one of the most significant changes is the new emphasis on what I would call public interest considerations, which is fairly unique in the world of competition law worldwide. And also the constitutional emphasis on competition law, which has started to flavor our competition law jurisprudence more recently.
And what I mean by that is: We in South Africa have a constitution like you have in the US. But, increasingly, the way in which the courts are interpreting our Competition Act has got a constitutional flavor to it. In other words, it's very much a sort of rights-based interpretation of our principles. And that primarily affects things like the interpretation of abuse of dominance provisions in particular. But, really, it's the public interest dimension to competition law, which is very much a new emphasis, as well as the constitutional rights-based interpretation of the legislation. And I think those are probably the two most striking features of the way in which the law has evolved more recently.
[00:04:00] Teece: Tell me a little bit more about this public interest issue and how it differs from the consumer welfare criteria which has crept into US law. Is it basically something similar or is it much broader?
[00:04:15] Norton: I think it's much broader, and it's really this emphasis in South Africa because of our previous political history about advancing the rights of previously disadvantaged persons. So, public interest law, or public interest law aspects under our competition law, are really designed to foster participation in the economy by previously disadvantaged persons and also to foster and improve employment domestically.
So for example, in a merger context, when the authority is evaluating a merger, they don't only look at traditional competition law issues such as unilateral and coordinated effects, but they also look at the public interest dimensions. In other words, will the transaction enhance participation in the economy by previously disadvantaged persons? Will it enhance employment? Or will it be negative for any of those public interest criteria? And increasingly, there is a very, very significant emphasis on those issues—sometimes more of an emphasis than on the traditional competition law issues.
To give you an example, we were recently involved in a very significant transaction which had major competition law consequences. But what the merging parties did in that case is they tended conditions which would foster the public interest aspects of the case and suggested that, on the basis of those public interest conditions, the transaction should be approved notwithstanding the very negative competition law consequences of the transaction. And ultimately it was approved on that basis.
And I think personally, I have a concern sometimes that the competition law considerations are becoming secondary to the public interest issues. And obviously, that also has significant consequences from a consumer welfare perspective.
[00:06:08] Teece: Does this mean that the emphasis on public interest will almost always trump efficiency and innovation, or are efficiency and innovation at least keeping their head above water, so to speak?
[00:06:22] Norton: They're keeping their head above water, and I don't think we've reached a point yet where the public interest considerations are the overriding factor, but they are increasingly significant. And sometimes there is undue emphasis on public interest criteria as opposed to a very clinical and objective assessment of the competition issues.
To my mind, at the very least, they should be equally weighted, and sometimes the authorities are losing sight of the detrimental effects of approving transactions, which are very negative competitional consequences but are approved on the basis of public interest criteria. And I think equally, if you approve a bad merger, that has very negative effects for consumers. And I think sometimes those issues are being lost sight of, personally.
[00:07:13] Teece: Well, I suppose if it's an international global merger, it probably creates a bit more uncertainty then about, well, how is it going to go in South Africa? Do you see a decoupling then with respect to global issues between South Africa and the rest of the world? Is there enough common base that one could still get a fair degree of predictability if you're an international player?
[00:07:37] Norton: There is still a fair degree of predictability, but as an international player who's doing a global deal, which has a reasonably significant South African dimension, you would need to pay very careful attention to these public interest issues because the risk you might run otherwise is the deal gets approved all over the world, but because you haven't satisfied the public interest dimensions in South Africa, you may run into difficulties. And what we are seeing is in big global deals which have a South African dimension, often the parties have to have a fairly unique set of South African conditions to address the public interest issues which they may not have in relation to other parts of the world.
[00:08:21] Teece: Well, I get the public interest angle. I'm not quite sure about the constitutional angle. I'm an economist, not a lawyer. So how does that play into the efficiency and innovation criteria that are commonly used?
[00:08:34] Norton: South Africa's constitution is a very advanced one and is often recognized actually internationally as one of the best or better constitutions worldwide. But one of the great emphases in the constitution is that it's very much a rights-driven constitution, and also looks to protect the interests, again, of previously disadvantaged persons.
And the way in which that plays out, insofar as the Competition Act is concerned, is particularly in relation to the abuse of dominance provisions, where you have large, dominant companies whose actions affect predominantly small and medium-sized businesses. What recent cases are saying is that the authority needs to take into account the effects on those types of entities and adopt a fairly robust approach in those types of circumstances. So that's primarily where the constitutional emphasis is starting to come.
[00:09:33] Teece: So if I think about the tech sector, for instance, that would enable at least competition policy issues to maybe front-run other regulatory issues or other regulatory structures—privacy issues, or access issues, and so forth. I guess competition has a place alongside of them, but maybe sometimes it's ahead of them. How does that shake down in South Africa?
[00:09:58] Norton: Well, I think you're right. And interestingly, Eleanor Fox has written quite extensively on this topic and had written a number of interesting articles about how South Africa's constitution should inform its competition law jurisprudence. We actually relied on a couple of her articles in a recent case, and the court was very interested in the views that she had expressed in those articles, and certainly this dimension of bringing a sort of constitutional emphasis to the interpretation.
Eleanor Fox was ahead of her time in a sense, and certainly the views that she's expressed in a number of these articles appear to have found favor with our courts. So, I think we are going to increasingly see a form of rights-driven interpretation of these types of provisions. And obviously, that's bad news for very dominant firms, particularly in the sense of exclusionary conduct, which may have a detrimental impact on small and medium-sized players. That's probably where the constitutional emphasis is likely to come.
[00:11:03] Teece: Well, that's very interesting, and you've touched on monopoly power and dominance issues several times, but what we haven't talked about is price fixing, exchange of information, and what, in the US of course, we call Section One issues.
Are there any significant differences between South Africa and most other developed countries with respect to those issues? And what have the recent amendments to the guidelines on exchange of information done in terms of how they might affect business behavior in your practice?
[00:11:35] Norton: I think South Africa's approach to so-called cartel conduct, price fixing, market allocation, collusive tendering is very much mainstream, and very much in keeping with everywhere else in the world on those issues. So that's pretty standard to be honest.
Insofar as information exchange is concerned, the principles here are, again, very much in keeping with mainstream competition law jurisdictions. The recent guidelines published by the commission—all they've really done has clarified the commission's approach, and that it is adopting one which is really in keeping with that taken by the European Commission or the DOJ, et cetera.
So I don't think there's anything particularly different in the approach taken in South Africa, but other forms of information exchange, particularly which deal with disaggregated, commercially sensitive information—and particularly information which may have an impact on pricing decisions or allocation of markets that the agency is saying it's going to look at very carefully. And we obviously live in a world which is technology-driven at the moment, so things like algorithms, et cetera, which may be used as a form of coordination, are increasingly under scrutiny.
I saw today in Bloomberg that there's a case in the US about algorithms being used in the hospitality industry in the Vegas Strip, and how customers there have brought antitrust lawsuits against some of the hotels there on the basis that they use pricing algorithms to fix prices. And, you know, those types of scenarios are also under consideration here. These types of issues we are looking at very carefully here are about the use of AI [artificial intelligence] to facilitate coordination and pricing, et cetera. So I think we are very much in keeping with the rest of the world and certainly the bigger competition jurisdictions in the way in which information exchange is viewed.
[00:13:27] Teece: So, most of the points of departure relate to dominance, but on information exchange and cartelization, most enforcement agencies are more or less in step is what I hear you saying. But you're also out in front, it seems, on some of the tech issues and the AI issues, which indicates to me that South Africa is actually quite a dynamic environment to work professionally.
[00:13:50] Norton: I think that's absolutely right. I think it is a dynamic environment. There's an increasing level of sophistication amongst the antitrust agencies here, and they always keep a fairly careful eye on developments in Europe and the US. So, although sometimes we lag a little bit behind, I think we are very much in step with developments in both Europe and the US, and particularly insofar as technology issues are concerned.
[00:14:19] Teece: Well, let's talk a little bit beyond competition. I know your law firm is a boutique, but it's also in a number of other areas. So tell me whether you are expanding and have the ambition to be a full-service law firm, or you're going to keep your boutique-y status—at least for a while longer.
[00:14:39] Norton: We are definitely determined to keep our boutique-y status. We have no ambition to become a full-service law firm. We want to stick to what we are good at, and that is really regulatory legal aspects with a particular emphasis on competition law, white collar crime, and what I would call commercial litigation, which is regulatory based.
Those are our strengths, and that's what we are good at. And I think we don't want to diversify into issues and areas of law where we don't have strength. We are able to hold our own against any of the big law firms in the areas in which we specialize. And that's where we've been successful, and I think we just want to double down on that. But we have no ambitions in getting into other areas which are really beyond our critical expertise.
[00:15:27] Teece: And so, with that somewhat narrower focus: with the ups and downs of COVID and potential global recession coming up, are you still able to maintain a robust enterprise? Tell me how it looks on a going-forward basis.
[00:15:41] Norton: Well, I think the last three to four years have probably been our busiest in the history of the firm. We were all a little concerned during the COVID period that there might be a reduction in workflow, but to the contrary, in fact, it's increased. And I think, in all of our key areas of work, we've seen an exponential increase in the level of matters.
So, the challenge, in fact, has been to refresh our team to make sure that they apply themselves with the same degree of vigor to all of the cases and to make sure that we don't drop our levels that we've been, I think, particularly successful with. So, it's been a very good period workwise for us, and we don't see any signs of that dropping off, but the challenge is to maintain the very high levels of expertise and results that we've been known for.
[00:16:32] Teece: Well, that brings me to a related topic, which is remote work. How have you been doing post-COVID? And how has remote work impacted learning and upgrading of skills, particularly of younger people in the office, which, in North America and here in Europe, has been quite a challenge?
[00:16:50] Norton: So, I think we were doing remote work before COVID. Because we were a small boutique firm, one of the sort of ambitions right from the beginning was to break the mold of traditional law firms, and breaking the mold, from my perspective as managing partner, was I don't care where you work. All I care about is that you give a high-value client service and, at the end of the day, that the client feels that they've got a better service from us than they could get elsewhere.
I think though, what we are increasingly trying to do going forward is to have select time periods for team building and meeting together as a group. It's more engaging in sorts of activities and issues which are not law-related but to build relationships within the firm. Because I think, on a daily basis, that the legal issues are being dealt with.
[00:17:44] Teece: Well, kudos, and I'm delighted to hear that your firm is evolving very positively in that regard. I heard that recently you had a big case on behalf of eMedia. As I understand it, this was a broadcasting company and Multichoice was forced to place four of the company's eTV channels back on this DSTV platform.
So that was a little bit of a headline grabber, as I understand it. What does it mean for abuse of dominance? I know we were talking a little bit about that before, but not in the context of this specific case. And has this ruling set new precedence in South Africa, or is it basically in line with prior cases?
[00:18:31] Norton: It's a bit of both. It's in line with prior cases in the sense of the interpretation of exclusionary conduct in an abuse of dominance context. But where it is unique is, when we were doing this case, I searched far and wide to find a similar case in any other jurisdiction where a dominant satellite broadcaster was required by a court in another jurisdiction or a competition authority to reinstate channels which it had removed from the platform ostensibly for commercial reasons. And I battled to find a similar case in any other jurisdiction. We looked very carefully, particularly in the US and Europe, to try and find a similar case, particularly in the television broadcasting sector. And we didn't find one. So I think it's a pretty unique case from that point of view.
The application of antitrust competition law principles in this case was reasonably normal. I mean, you had a very, very dominant player from a South African point of view with more than 60 percent market share excluding a rival's channels for reasons which, ultimately, the court found were anticompetitive. But there were features of the case which were pretty unique. We were very pleased with the outcome, and I think it does set a precedent, certainly for the broadcasting sector in South Africa.
[00:19:59] Teece: Well, let's come back to this public interest issue, although not in the context of competition policy, but just in general. I understand that you've been representing clients like the non-for-profit Freedom Under the Law organization and that you do work to support constitutional democracy. What do you think is important for your firm to do in matters like this in South Africa, and how do you select the issues that you're willing to support on a pro bono basis—if that's the way you're doing it?
[00:20:33] Norton: This is an issue that we feel particularly strongly about, and we do a number of pro bono matters of this kind—particularly cases which we think are fundamental to underpinning democratic rights in South Africa. And I think the philosophy behind it, if I can put it to you that way, is one which says, “We are all ultimately citizens of the country. But we are more privileged and more fortunate than many of our other citizens in the country, who haven't had the same benefit of education and wealth and all of those sort of things.”
We have a responsibility to get involved and to maintain democratic structures in the country, and particularly to take on cases which may advance the interests of those in the country who don't have the resources and manpower to speak up for themselves. So, a lot of the cases and projects we've done have that philosophical underpinning. And if you forgive the sort of colloquial expression, but I think the philosophy is that you can't take democracy for granted anymore, and that applies anywhere in the world.
We all have a responsibility to, in a sense, get our hands dirty. There's no more sitting on the sidelines and expecting other people to preserve these types of values and to stand up for what's right. We all have a responsibility and accountability to get involved, and that's certainly the driving philosophical view behind our involvement in these types of cases.
[00:22:03] Teece: I agree with that 100 percent. We can't take democracy for granted, neither in the United States, nor in Europe.
We're almost out of time here, Anthony, but I have a last question for you, since you've accomplished a lot here. But look back over the last three years. What's the biggest lesson that you've learned about managing a law firm, and how are you looking for the next three to five years from a leadership point of view, from a management point of view, and from a stewardship point of view? Can you give me a sense of where you've come from as a leader, where your firm has come from, and where it needs to go, and where you hope it will go?
[00:22:41] Norton: I was thrown into the deep end when we started this law firm almost fifteen years ago, having left a very established law firm with all of the infrastructure and everything. So, I think it's been a very steep learning curve over the years, particularly about developing the firm's infrastructure and resources.
But I think probably the biggest learning has been about—and it's going to sound slightly cliched—but the importance of the people within the firm, and developing the expertise and the resources from a personnel perspective within the firm. And really realizing that our people are our greatest asset, you know? Ultimately, what drives the firm and drives its reputation is the people within it. And I think the biggest challenge I've faced is how to empower the people within the firm, and how to instill confidence in them that—even for the more junior members of the firm—they've got the ability and they've got the experience to deal with difficult situations and sometimes with difficult clients.
That's really been the critical learning that I found during COVID. And obviously, also during the COVID period, it's been an emotional period for people within the firm. You know, some of the members of our firm lost family members. That was a very, very difficult experience, not only for them, but for people within the firm around them. And fortunately, we've had a very close-knit team that's come through this situation very well.
But that's probably been the biggest challenge: empowering the people around me and making sure that they feel empowered that one day they're going to take over. And getting them to run the cases themselves, and for me to take a step back sometimes and let them run with things. I think that's probably been the greatest learning in all of this.
[00:24:25] Teece: Well, that's very interesting. And yes, it is a cliche to say that people matter, people are number one. But what you've told me is that it's really a matter of both brain and heart. That's another cliche, and it seems like you scored well on both, and so congratulations on great success to date. And we look forward to maybe speaking again in a few years and just seeing how leadership has evolved, how delegation has matured, and how the firm is sitting.
So, thank you very much for your time today. There are a lot of insights that I'm sure our listeners will enjoy hearing.
[00:25:01] Norton: Well, thank you very much for having me. And thank you for the conversation, which has been stimulating and interesting. So, thank you.