The Competition Tribunal has ruled that it has jurisdiction to hear the so-called “forex cartel case” in which foreign and local banks are implicated in alleged collusion to manipulate the rand-dollar exchange rate.
In its order issued on 30 March, the tribunal also granted the Competition Commission’s applications to join a further nine banks as respondents in the matter, bringing to 28 the total number of implicated banks.
Charges against nineteen banks were first laid eight years ago. The banks originally implicated include Absa, Barclays, Investec, JPMorgan Chase, Nomura International, and Standard Bank.
The nine added banks are: Bank of America; Credit Suisse Securities (USA); FirstRand; FirstRand Bank; HSBC Bank USA, a subsidiary of multinational company HSBC; Merrill Lynch, Pierce, Fenner & Smith; Nedbank; Nedbank Group; and Standard Americas.
The commission alleges that, between 2007 and 2013, traders working at banks in Europe, South Africa, Australia, and the United States conspired to manipulate the rand through information-sharing on electronic and other platforms and various co-ordination strategies.
It alleges the manipulation impacted the exchange rate of the rand, which affected various parts of the economy, including imports and exports, foreign direct investment, public and private debt, and company balance sheets, which had implications for the price of goods and services and financial assets.
The commission alleges the banks contravened section 4(1)(b) of the Competition Act in that they reached an agreement and/or co-ordinated their activities to participate in “a single overarching conspiracy” to manipulate and distort the normal competitive conditions in the trading of the rand-dollar.
It wants a fine to be imposed of 10% of the banks’ annual turnover.
The tribunal dismissed a second round of applications brought by various banks in response to the commission’s updated complaint referral (charge sheet).
The banks raised objections to the commission’s updated complaint referral on the grounds that, among other things, the South African competition authorities lacked jurisdiction, the period prescribed to lay a charge has expired, and the charges were vague.
In addition to ruling that it has jurisdiction to hear the matter, the tribunal ordered that the banks must respond to the referral by filing their answering affidavits (in the main matter dealing with the merits of the case) within 40 business days of the tribunal’s order.
If the commission wishes to file replying affidavits, it must do so within 20 business days of the banks’ answering affidavits.
The tribunal’s order effectively provides for the pleading stage of the matter to progress in line with specified time frames before the merits of the case are heard.
