The commission launched a case in 2015 against 28 local and international banks, alleging they colluded to fix the dollar-rand exchange rate.
Banks implicated in rand manipulation argued at the Constitutional Court on Wednesday that the Competition Commission’s allegations against them are based on inferences and it has not provided evidence of collusion.
The commission launched a case in 2015 against 28 local and international banks, alleging they colluded to fix the dollar-rand exchange rate. The case stems from findings by the commission that traders manipulated bids and offers, and took turns to buy and sell dollars and rands to maintain profit margins.
The commission alleges a single overarching conspiracy from 2007 until at least September 2013, possibly continuing after traders lost access to chat rooms on news and information company Bloomberg’s platform that had been used to coordinate trades.
The matter has gone back and forth between the commission, the Competition Tribunal and the Competition Appeal Court since 2017. In 2023 the tribunal ruled that the commission had jurisdiction over foreign banks, but the appeal court dismissed the case against 17 international banks. The commission then appealed to the Constitutional Court, which must now decide whether it may prosecute foreign firms accused of collusion.
Domestic banks argue the commission lacks sufficient evidence, while foreign banks contend that it has no jurisdiction over them.
The banks named in the case are Standard Bank, Nedbank, FirstRand, Citigroup, Nomura, Investec, JP Morgan, Credit Suisse, Commerzbank, Standard New York Securities, Macquarie Bank, Bank of America Merrill Lynch, ANZ, Standard Chartered and Absa.
Barclays and Absa applied for leniency from the commission, while Citibank and Standard Chartered settled with fines.
Lawyers representing Nedbank said the commission’s case against it is “narrow” and “skeletal” and based on news and media company Reuters’ public trading platform, which shows the price a bank is willing to buy or sell currencies.
The Nedbank lawyers said the commission did not place the bank in any of the chatrooms where price manipulation is alleged to have occurred.
Lawyers representing Australia and New Zealand Banking Group (ANZ) challenged the commission’s jurisdiction to prosecute it and said there was no prospect of success. Nor does it raise any constitutional principle, they said, adding that the commission had added any bank to which there was some reference in the chats to the case.
The commission has argued that it is the only institution capable of prosecuting rand manipulation, whether it occurs in New York, London or Johannesburg. On Tuesday, its lawyer, Tembeka Ngcukaitobi, told the court that it is almost impossible to prosecute cartels because they employ procedural objections as legal delays for years.
Ngcukaitobi described the case as a “quintessential example of a transnational cartel” and an attack on South Africa’s sovereignty. He argued that price manipulation has a permanent effect, distorting the value of imports and weakening economic stability.
French based BNP Paribas has argued that the commission’s case is vague and contradictory because it cannot state when the alleged conspiracy ended.
“The allegations are vague and embarrassing because, simultaneously, the commission alleges the end of a single overarching conspiracy in 2007; that it ended ‘after September 2013’; that they do not know when the single overarching is ongoing or has ceased,” BNP said in its affidavit.
It said this lack of clarity is critical to whether collusion occurred and has prejudiced the bank, causing reputational harm. It contends the commission cannot sustain a case of single overarching conspiracy in law.
In its affidavit to the Constitutional Court, the commission said BNP is implicated through its former employee, Jason Katz, who was charged by the US justice department, who entered a guilty plea. The commission argued that BNP cannot avoid explaining Katz’s conduct by stalling on procedural grounds.
“The burden is on BNP to explain its employee’s conduct,” the commission said. “Having failed to persuade the tribunal and the Competition Appeal Court, BNP now approaches this court in another attempt to obstruct and delay the inevitable consequences of its anti-competitive conduct.”
The commission said it is entitled to plead that it does not know on what date each respondent ceased to participate if its participation had indeed ceased.
Furthermore, the commission said the information concerning whether the prohibited conduct is ongoing, is exclusively in the bank’s knowledge. It is not for the commission to provide evidence that the conspiracy has ceased
The commission maintains that legal technicalities should be dealt with during the trial. It says the banks’ coordinated behaviour, both on behalf of clients and for their own accounts, provides sufficient proof of collusion.
The banks maintain the commission has not put forward primary facts of rand manipulation but only allegations ceased on market trends.