Tag: banks

Cartel, Courts, and Currency: Inside South Africa’s Longest-Running Bank Collusion Case

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By Matthew Freer, Astra Christodoulou and Natasha Reib

Background

After a decade-long battle over allegations made by the Competition Commission, alleging that up to 18 local and foreign banks had participated in a Single Overarching Conspiracy (“SOC”), the Constitutional Court of South Africa delivered its judgment on the multi-application dispute on 30 June 2026 in BNP Paribas v Competition Commission of South Africa; Credit Suisse Securities (USA) LLC v Competition Commission of South Africa; Competition Commission of South Africa v Bank of America Europe Designated Activity Company and Others [2026] ZACC 28.

The matter arises from the Competition Commission’s complaint that a number of South African and international banks contravened section 4(1)(b) of the Competition Act, which prohibits restrictive horizontal practices. The section provides that such an agreement or concerted practice is prohibited if:

“(b) it involves any of the following restrictive horizontal practices:

(i) directly or indirectly fixing a purchase or selling price or any other trading conditions;

(ii) dividing markets by allocating customers, suppliers, territories, or specific types of goods or services; or

(iii) collusive tendering.”

The Commission alleged that up to 18 local South African banks and foreign banks, which were identified in the February 2017 referral, colluded to manipulate the United States Dollar/South African Rand (USD/ZAR) exchange rate between 2007 and 2013.

Leniency and settlements

Leniency was granted to three respondents, Absa Bank Limited and the two Barclays entities, on the basis of cooperation with the Commission in prosecuting the complaint. A fourth respondent, Citibank NA, reached a settlement with the Commission. This left 14 of the original 18 remaining respondents as active parties in the referral proceedings.

The Joinder Battles: Adding Banks After Referral

In January 2018, the Commission served an application to join another 5 respondents to the matter. An exception was filed arguing that the Commission could not add more respondents to the matter after the referral had been made. The Constitutional Court held that neither the Competition Act nor the Tribunal Rules impose an absolute prohibition on post-referral joinder. Furthermore, it was confirmed that there is no need for the Competition Commission to initiate an entirely new complaint every time a new respondent is identified post-referral.  A second joinder application followed in September 2020, adding a further five respondents, including Standard Americas Incorporated (“SAI”), which brought the total number of respondent banks to 28.

Pleading a Single Overarching Conspiracy

The respondents filed further exceptions to challenge the referral made in February 2017. They argued that the Commission had not pleaded its case properly; that the Tribunal lacked personal jurisdiction over foreign banks, and that the alleged collusion was not adequately explained. The Constitutional Court had to consider the exceptions raised but mainly focused on the issues regarding pleading, jurisdiction, and the addition of respondents post-referral rather than the allegations of collusion.

As to whether the Commission pleaded its case properly, the Constitutional Court clarified the legal principles governing an SOC and explained that the Commission must plead enough material facts, and not just vague allegations, to make out a prima facie case that each respondent intentionally participated in the collusion.  The order handed down in the earlier Competition Appeal Court judgment illustrates just how granular this pleading standard is. The Commission was required to “provide the facts that are relied on to prove that the particular respondent joined or had joined the SOC” (paragraph 19).

The Court clarified the standard applicable to exceptions of this kind. The question is whether, assuming all the facts pleaded by the Commission to be true, the Tribunal could reasonably conclude that the Commission has established a prima facie case for the relief it seeks. Respondents are generally confined to the Commission’s pleaded case when raising an exception, save where fairness justifies a limited departure.

Jurisdiction Over Foreign Banks: Section 3(1) and the Doctrine of Res Judicata

In terms of the exception regarding the Tribunal’s jurisdiction over foreign banks, section 3(1) of the Competition Act is relevant.  The section provides that “this Act applies to all economic activity within, or having an effect within, the Republic.” The Commission’s own position was that section 3(1) displaced the common law requirements of personal and subject matter jurisdiction entirely, so that any effect within South Africa sufficed to found the Tribunal’s jurisdiction, even over banks with no presence here. That argument was rejected by both the Tribunal and, on appeal, the Competition Appeal Court, which held that personal jurisdiction over foreign banks was still required, while developing the common law so that it could be established where there were “adequate connecting factors” between the Commission’s complaint and the Tribunal as a forum (paragraph 17), such as whether the alleged conspiracy connected pure foreign banks, local foreign banks, and South African banks in a single scheme targeting the rand.

The Commission argued before the Constitutional Court that this interpretation was wrong and should be revisited. But the Constitutional Court did not reconsider the interpretation of the section, as the Competition Appeal Court’s earlier judgment on the point had never been appealed. This attracted the doctrines of res judicata, since the matter had already been finally decided, and peremption, since the Commission’s conduct in pleading its later case on the basis of that judgment showed it had accepted it, both of which prevented the Commission from reopening the issue in these proceedings. As the Court put it, quoting its earlier judgment in Zuma v Secretary of the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector Including Organs of State [2021] ZACC 28; 2021 (11) BCLR 1263 (CC):

“the principles of legal certainty and finality of judgments are the oxygen without which the rule of law languishes, suffocates and perishes” (paragraph 99).

The previous interpretation of the section accordingly remains binding for purposes of this matter.

The outcome

As to outcome, the Constitutional Court refused BNP Paribas leave to appeal, with costs, so the Competition Appeal Court’s decision against it stands. Credit Suisse Securities (USA) LLC succeeded, its appeal was upheld, and the Commission’s application to join it was dismissed, so it is no longer a respondent. The Commission’s own appeal succeeded only against JPM Bank and SAI, whose cases were reinstated before the Tribunal. The Commission’s appeal failed against all the other banks named above, and HBEU’s cross-appeal was also dismissed.

What this means going forward

Although this judgment did not determine whether the banks participated in the alleged SOC, it is likely to set a new precedent in competition law procedure in South Africa. This is because it establishes guidance on how future multi-application disputes regarding a SOC should be investigated, pleaded, and litigated. The case discusses how exceptions should be decided, the legal requirements for a SOC pleading, the jurisdiction over foreign firms involved in anti-competitive conduct affecting South Africa, and the addition of respondents post-referral.

South African Competition Appeal Court releases its decision in respect of the Forex matter: The hindering of international cartel conduct or the inadequate presentation of a case

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By Tyla Lee Coertzen and Sarah van den Barselaar

Introduction

In our previous update on this matter, we reported on the South African Competition Appeal Court (“CAC”)’s second hearing of the Forex case.

On Monday, 8 January 2024, the CAC handed down its judgement of the appeals brought by several national and foreign banks (the “Respondents”) against an earlier decision handed down by the South African Competition Tribunal (the “Tribunal”).

The CAC’s decision comes eight years after the South African Competition Commission (“Commission”) commenced its investigation into various national and foreign banks for alleged collusion and manipulation of the Rand-Dollar exchange rate between the years 2007 to 2013. The appeals heard by the CAC arose from the exceptions proceedings launched by majority of the Respondent banks, which sought to attack the allegations against them.

The CAC has now formally dismissed the cases against 23 of the 28 Respondents, highlighting a significant question on the impact of the judgement, namely whether it has the effect of hindering international cartel conduct or whether it was merely a product of an inadequate case presented by the Commission.

Background to the judgement

The CAC’s judgement follows a decision handed down by the Tribunal in 2019 (which ordered the Commission to comply with several requirements to establish the necessary jurisdiction over a number of Respondent banks who were neither domiciled nor carried on business in South Africa) as well as the 2020 decision of the CAC in the same matter. In this regard, the Commission was ordered by the Tribunal to reconfigure its referral affidavit to include allegations pertaining to, inter alia, (i) the establishment of a direct or immediate and substantial effect in South Africa, (ii) confining the case to a single overall conspiracy (“SOC”), (iii) the facts relied on to prove that the relevant bank had joined the SOC, and (iv) the facts on which the Commission relied to allege that there were adequate connecting factors between the Respondents. In summary, the Commission was ordered to amend its referral affidavit to ensure it met the requirements of both personal and subject matter jurisdiction against the Respondents.

The Commission based its entire case on the alleged SOC in which it alleges all of the Respondents were participants. The Commissions case thus had to: (i) meet the requirements set out in the Tribunal’s 2019 decision and the CAC’s 2020 decision, (ii) set out the core requirements of a SOC, and (iii) show that each firm was aware of actual conduct planned or put into effect by other undertakings in pursuit of same. The Commission’s case against the Respondent banks was based on the establishment of a SOC, namely, a common anti-competition objective (i.e., that each firm intentionally contributed to the common objectives that were pursued by all participants).

Simply put, the Commission had to prove that all the Respondent banks in its referral affidavit had perpetrated the SOC and, where that each bank could have reasonably foreseen their participation in the SOC, were aligned with the risk of such. In determining whether the Commission had alleged this, the following legal issues were placed before the CAC:

  1. whether Respondents who were not traders in foreign currency could be included in the alleged conduct;
  2. whether the referral affidavit complied with the requirements set out by the Tribunal;
  3. whether the Commission adequately demonstrated the existence of personal and subject matter jurisdiction in cases of pure peregrine (i.e., firms neither domiciled nor carrying on business in South Africa);
  4. whether the Commission adequately demonstrated the existence of personal and subject matter jurisdiction in cases of incola and local peregrine (i.e., banks with some presence in South Africa by way of a local branch in South Africa);
  5. whether the allegations contained in the referral affidavit were sufficient to show the Respondents had joined and/or actively participated in the SOC; and
  6. whether certain Respondents were incorrectly joined in the proceedings.

Key findings

The CAC made the following key findings.

Holding company liability

The CAC found that the fact that certain Respondents who were merely holding companies of banks (and who were not themselves registered banks and not authorized to trade in foreign currency) cannot be a sufficient basis on which to establish a case against such company. On this issue, and due to the insufficient evidence presented by the Commission, the CAC found that several Respondents had been incorrectly joined in the proceedings.

Personal and subject matter jurisdiction

The CAC found that that in establishing the requisite jurisdiction over international Respondents, there are separately defined requirements for the establishment of both personal and subject matter jurisdiction. Specifically, in respect of subject matter jurisdiction, it must be established that the alleged conduct has a direct or immediate or substantial effect in South Africa. On personal jurisdiction, the CAC found that one needed evidence of linkages to each South African bank as part of the SOC (thus linking the incola banks and the peregrini banks).

The CAC found that reference to an occasional participation without any evidence and that is not linked to a South African bank is inadequate to meet the requirements set out by the Tribunal, and resultantly found that the Commission had failed to show personal jurisdiction for several of the Respondents.

Non-traders

The CAC emphasized that the individuals who were not traders in foreign currency employed by the banks derived no basis to be joined to the matter. On this basis, the CAC dismissed the case against the sixth Respondent’s (namely, Standard New York Securities Inc.).

Impact of the judgement

Simply put, the CAC upheld the appeals brought by 23 of the Respondent banks and dismissed the appeals brought by the remaining 4 Respondent banks. As such, the remaining 4 Respondent banks will proceed to face charges at a main trial before the Tribunal alongside Investec Bank (who elected not to join the other Respondent banks in the exception proceedings).

The scope of the judgement is significant in that it did not sanction cartel conduct. Rather, the decision concerns the key averments that needed to be put forward by the Commission in order to successfully present a case against all the Respondent banks it joined in the proceedings. While the Commission had several opportunities to amend its pleadings in order to comply with the requirements set out by the Tribunal and the CAC, it could not do so adequately and was unable to provide the necessary evidence nor establish the necessary jurisdiction against several of the Respondent banks. Thus, the CAC’s judgement represents the Commission’s inadequate case for prosecution of the alleged cartel conduct.

The inadequacies are seen in the findings of the CAC, including, inter alia, the Commission failing to comply with the requirements of the CAC’s 2020 decision, and the failure of the Commission to lead a sufficient case with adequate evidence against the Respondent banks. This is despite the Tribunal’s previous decision indicating the need to establish personal jurisdiction and allowing the Commission the ability to reconfigure its referral affidavit in an attempt to ensure a fair and just handling of the matter. Despite several years of investigations and preparation, the CAC’s recent judgement represents a mere product of the Commission’s case being flawed and lacking necessary evidence.