Constitutional Court Blocks Competition Commission's Bid Against Banks Over Rand Manipulation

The Competition Commission had accused 18 banks of colluding to fix the USD/ZAR exchange rate from 2007 until at least September 2013. The Commission alleged that the banks manipulated the exchange rate, which had a devastating impact on the country's economy.

However, the Constitutional Court on Tuesday ruled that the Commission did not have jurisdiction over the majority of the international banks involved in the saga. The court handed down judgment in three applications for leave to appeal and one application for leave to cross-appeal a judgment of the Competition Appeal Court (CAC) delivered in January 2024.

The Commission's appeal succeeded against JPM Bank and SAI, but failed against the majority of the other financial institutions, including Standard Bank, Nedbank, and First Rand. The Commission had also referred the case regarding the alleged rand fixing against 28 local and foreign banks to the Competition Tribunal in June 2020.

The Competition Tribunal ordered the banks to file their answering affidavits in response to the Commission's complaint referral but objected to the Tribunal order and appealed it to the CAC. The CAC, in its judgment released 17 banks from the complaint referral before they answered the allegations against them and restricted the Commission's case to only four respondent banks.

The Commission, among others, appealed the CAC order to the Constitutional Court against 13 banks. Advocate Tembeka Ngcukaitobi, acting on behalf of the Competition Commission, argued that there is enough evidence to establish a prima facie case that the banks were involved in the manipulation of the rand.

Judge Owen Rogers, who wrote the 133-page judgment, said the Commission will be able to proceed against BNP Paribas, JPM Co, JPM Bank, Investec, SAI, and HBEU. The court also addressed the issue of whether the Competition Commission can add companies after a complaint has already been referred to the Competition Tribunal.

Judge Rogers said the Competition Act does not prevent adding companies after referral. He said new information may come to light through pleadings, witnesses, or settlements and could reveal the involvement of more entities.

The Competition Commission will be able to continue its case against some of the implicated entities, but the court's ruling effectively blocks the Commission's decade-long battle against the banks.

The ruling means that the Commission will not be able to proceed against 13 of the 18 banks that were originally implicated in the saga.

The Commission has been working to hold the banks accountable for their role in manipulating the rand against the US dollar. The Commission's case was referred to the Competition Tribunal in June 2020, and the Tribunal ordered the banks to file their answering affidavits.

The Commission's allegations against the banks include violating the Competition Act and engaging in anti-competitive behavior. The Commission argues that the banks' actions had a devastating impact on the country's economy and led to significant losses for consumers.

The banks, on the other hand, argue that they were simply responding to market forces and did not engage in any wrongdoing.

The Commission's case against the banks has been ongoing for over a decade, and the ruling means that the Commission will not be able to proceed against 13 of the 18 banks that were originally implicated in the saga.

The Commission will be able to continue its case against some of the implicated entities, but the court's ruling effectively blocks the Commission's decade-long battle against the banks.

The ruling is a significant setback for the Commission, which had been working to hold the banks accountable for their role in manipulating the rand against the US dollar.