Competition Commission to appeal decision on banks and the rand

The Competition Commission has approached the Constitutional Court for leave to appeal the Competition Appeal Court’s judgment of 8 January which upheld the appeal of the majority of the respondent banks accused of price-fixing and division of markets in contravening the Competition Act.

The commission initiated a complaint in April 2015 centred on allegations of price-fixing and market division in the trading of the dollar and rand currency pair, alleging that the anticompetitive practices took place between September 2007 to at least September 2013.

In August 2016, the commission amended the complaint, adding additional financial institutions and including allegations of market allocation through customer allocation against the financial institutions.

The commission subsequently referred the complaint to the Competition Tribunal in February 2017. The respondent banks took exception to the original referral. The tribunal adjudicated their objections in 2019 and considered them again on appeal before the Competition Appeal Court in 2020, which ordered that the commission file a new referral affidavit to substitute and replace all the complaint referral affidavits.

In June 2020, the commission referred a case against 28 local and foreign banks to the tribunal, alleging they colluded with one another to fix the foreign exchange rate regarding the US dollar and the South African rand currency pair.

ALSO READ: Treasury concerned after bank admits to manipulating the Rand

Banks ordered to file answering affidavits

The tribunal ordered the respondent banks in March 2023 to file their answering affidavits in response to the commission’s complaint referral but they objected to the tribunal order and appealed it to the Competition Appeal Court.

The Competition Appel Court delivered its judgment in January this year and ordered four of the 21 respondent banks to file, within 40 days, their answering affidavits with the tribunal. The Competition Appeal Court also upheld the appeal by 17 respondent banks which sought an order to set aside the March 2023 tribunal decision.

The four respondent banks ordered to file their answering affidavits are BNP Paribas, JP Morgan Chase and Co, HSBC Bank Plc and Credit Suisse Securities (USA) LLC. The order therefore released 17 respondent banks from the complaint referral before they answered the allegations against them and restricted the commission’s case to only four respondent banks.

In its current application for leave to appeal, the commission is appealing the Competition Appeal Court’s order to the Constitutional Court against 13 respondent banks. They are:

• Bank of America Merrill Lynch International Designated Activity Company,
• JP Morgan Chase Bank N.A.,
• Australia and New Zealand Banking Group Limited,
• Standard Bank of South Africa Limited,
• Nomura International PLC,
• Commerzbank AG,
• Macquarie Bank Limited,
• HSBC Bank,
• USA National Association, Merrill Lynch Pierce Fenner & Smith Inc,
• Bank of America, National Association,
• Nedbank Limited,
• FirstRand Bank Limited, and
• Standard Americas, Inc.

ALSO READ: Standard Chartered admits it manipulated the rand, agrees to R42 million fine

Competition Commission will not appeal order against 4 banks

The commission said in a statement on Tuesday that it will not appeal the Competition Appeal Court’s order regarding the Nedbank Group Limited, FirstRand Limited, Credit Suisse Group and Standard New York Securities Inc. It also won’t appeal the order that dismissed the appeals of BNP Paribas, JP Morgan Chase and Co, HSBC Bank plc, and Credit Suisse Securities (USA) LLC.

According to the commission, ABSA Bank Limited, Barclays Capital Inc and Barclays Bank plc applied for leniency, while Citibank N.A. and Standard Chartered Bank have settled with the commission. Investec Limited and Investec Bank Limited remain respondent banks required to file answering affidavits.

“This appeal will provide the Constitutional Court with an opportunity to pronounce on whether the South African competition authorities have jurisdiction to investigate and prosecute firms based outside South Africa whose anti-competitive conduct affects the South African economy,” competition commissioner Doris Tshepe says.