• Uniform Message

    Cyril Ramaphosa has called for ANC policy certainty, saying the NDP 'is our lodestar'.

  • Vuyani Jarana

    Unions have staged lunchtime pickets at airports countrywide in support of SAA's outgoing CEO.

  • Fin24’s newsletter

    Sign up to receive Fin24's top news in your inbox every morning.

Loading...

Commission ordered to revise its forex price-fixing case against 23 banks

29 minutes ago
Lameez Omarjee, Fin24

The Competition Tribunal has ordered the Competition Commission to revise its referral against banks implicated in a foreign exchange price-fixing case.

The tribunal on Wednesday issued an order on pre-trial applications ahead of the main case, which is yet to be heard. 

The matter dates back to February 2017, when the commission referred a forex collusion case initially involving 17 banks to the tribunal. The commission had been investigating price fixing and market allocation in the trading of foreign currency pairs involving the rand.

The commission is a statutory body that investigates uncompetitive behaviour, while the tribunal adjudicates cases and hears appeals.

The tribunal on Wednesday ordered that the commission redraft its initial referral within 40 days, taking into account the different issues the tribunal has ruled on in pre-trial applications.

Litigation 

Since 2017 the commission has been engaged in litigation with banks, some of whom believe the competition authorities do not have jurisdiction over the matter as they are international groups. In total there are 23 respondents to the case, three of which are local banks – Absa, Standard Bank and Investec Limited.

The other banks are BNP Paribus, Bank of America, Merrill Lynch, Nomura International, Standard Chartered Bank, Credit Suisse, Commerzbank, Macquire Bank, HSBC, Citibank, Barclays Capital, Barclays Bank, P Morgan Chase & Co, JP Morgan Chase Bank, Standard New York Securities and Australia and New Zealand Banking Group.

All of the banks have raised objections to the charges against them.

Wednesday's order read: "Some of the banks' objections relate to whether the commission has jurisdiction over them, others relate to whether the case has prescribed, and all complain that the complaint referral lacks particularity."

The tribunal requires the commission to confine the case against the banks to "one of a single over-arching conspiracy". More detail must also be provided.

Some respondents, in submissions, had labelled the commission's case as "vague and embarrassing". The tribunal itself noted that referrals by the commission lacked focus and consistency. "The commission’s case has suffered a lack of focus," the order read.

Evolving case 

The Tribunal also noted that the commission's case had changed.

"No reader of the February [2017] referral would have understood the case in the way it has been presented now," the tribunal said. "We have directed it (the Commission) to file a completely new affidavit, that substitutes and replaces the two others, so that the respondents are faced with only one pleading to answer."

The commission also wants more banks belonging to the "same corporate family" to join the application. Theses banks are HSBC Bank USA, National Association, Merrill Lynch Pierce Fenner and Smith, Bank of America, Investec Bank Limited and Credit Suisse Securities US. All of the banks, with the exception of Investec Bank Limited, objected to the joining.

Fines

The tribunal said that international banks without a presence in SA cannot be fined. A declaratory order of anti-competitive behaviour must rather be sought by the commission. 

A penalty can be administered against international banks with a presence in SA, but the penalty musyt be calculated on the turnover of the bank in the country, according to the order.

"In both of these instances, the Commission would still need to allege that the conduct of the respondent banks had an effect in South Africa, that met the internationally recognised threshold of being direct or immediate, and substantial before the Tribunal could assert its jurisdiction in making any order," the order read.

So far Citibank has paid a fine of R69.5m and Absa, which previously apologised for its involvement, was not fined after it agreed to work with regulators,as Bloomberg reported previously.

The rand which opened at R14.60/$ weakened to R14.80/$ on the back of reports on the ruling, TreasuryONE noted in a market update.

NEXT ON FIN24X

 
 
 
 

Company Snapshot

Voting Booth

SARS has lifted the tax return threshold from R350 000 to R500 000 per year. What are your thoughts on this??

Previous results · Suggest a vote

Loading...