Rand case a tough test for Compcom

Published Feb 9, 2024


The result achieved in the country’s highest court over the rand/dollar manipulation scandal will confirm whether or not the Competition Commission has botched this particular case, which could put the credibility of its work in question, a mercantile law expert has said.

This comes as the Commission approached the Constitutional Court for leave to appeal a Competition Appeal Court (CAC) judgment handed down last month, which upheld an appeal by majority of the respondent banks accused of rand/dollar currency manipulation for at least six years.

In June 2020, the Commission had referred the case to the Competition Tribunal against 28 local and foreign banks alleged to have colluded with one another to fix the foreign exchange rate in respect of the US dollar and the South African rand (USD/ ZAR) currency pair between September 2007 to at least September 2013.

While the respondent banks were ordered by the Tribunal in March last year to file their answering affidavits, they opted to appeal to the CAC.

The CAC delivered its judgment last month and ordered four of the 21 respondent banks to file, within 40 days, their answering affidavits with the Tribunal. However, it also upheld the appeal by 17 respondent banks which sought a CAC order to set aside the March 2023 Tribunal decision.

The respondent banks ordered by the CAC to file their answering affidavits are BNP Paribas, JPMorgan Chase and Co, HSBC Bank Plc, and Credit Suisse Securities (USA) LLC.

In its current application for leave to appeal, the Commission is appealing the CAC order to the Concourt against 13 respondent banks: Bank of America Merrill Lynch International Designated Activity Company; JPMorgan 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. Absa Bank Limited, Barclays Capital Inc and Barclays Bank Plc applied for leniency. Citibank N A and Standard Chartered Bank have settled with the Commission.

Dr Tinashe Kondo, a senior lecturer in competition law in the Department of Mercantile and Labour Law at UWC, said the Concourt has locus standi in competition matters.

“Section 62 of the Competition Act 89 of 1998 provides for the rules on appellate jurisdiction. Section 62(4) states that ‘an appeal from a decision of the Competition Appeal Court in respect of a matter within its jurisdiction in terms of subsection (2) lies to the Constitutional Court, subject to section 63 and its respective rules’.

“The decision by the Competition Commission to approach the Constitutional Court in respect of the rand-fixing saga is indeed a welcome and anticipated development. Given the fanfare that has taken place with respect to the proceedings, especially after the judgment of the Tribunal, there was no way in which the Competition Commission would not pursue this to the highest court. As indicated by the Competition Commissioner, Doris Tshepe, “(t)his 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 that are based outside of the Republic whose anti-competitive conduct affects the South African economy”.

Among many issues, two issues rise to the forefront that will be essential in the proceedings in the Concourt, which are jurisdiction and that of the criteria to establish a single overarching conspiracy by a cartel, Kondo said.

“It would be ideal that the leave to appeal be granted in order that the highest court in the land give finality to the issues. More so, the result will confirm whether or not the Competition Commission has botched this particular case. This would be a competition tragedy of note given that the Commission has enjoyed widespread success in the past few decades. This might perhaps signal the decline of a once-favoured institution by many.”

Cape Times