By Lehlohonolo Lehana.
The Constitutional Court’s has cleared South African banks, namely, Standard Bank, Nedbank and First Rand Bank in the prolonged currency manipulation case.
The Competition Commission accused 28 major banks, including Standard Bank, Nedbank and FirstRand, of colluding to manipulate the dollar/rand foreign exchange rate in 2015.
It approached the Constitution Court after the Competition Appeal Court threw out their case against banks claiming there was insufficient evidence to prove a conspiracy.
The court’s ruling was handed down yesterday, 8 January, clearing all but four of the banks mentioned in the original investigation.
The court criticised the Commission’s case, dismissing it on the grounds of a lack of evidence, a lack of jurisdiction and overreach.
ConCourt ruled that the Commission’s prosecution against the banks was based on flawed factual assumptions and completely lacked the required evidentiary link to prove they participated in a single overarching conspiracy.
This permanently clears Standard Bank, Nedbank, FirstRand Bank and several other banks of the allegations that have hung over them since the case was first referred to the Competition Tribunal in 2017.
The ruling also dismissed the Commission’s attempt to revive its case against these banks, while only allowing its appeal to proceed against JPMorgan Chase Bank N.A. and Standard Americas Incorporated.
Some banks reached agreements with the Commission. Absa received leniency in exchange for cooperating with the investigation, while Citibank entered into a settlement.
The remaining banks challenged the Commission’s referral on numerous legal grounds, arguing that its case was inadequately pleaded and that several respondents had been improperly joined.
The Apex Court ultimately found that many of those procedural objections were justified.
A key issue was whether the Commission could join additional banks after it had already referred the complaint to the Competition Tribunal.
The court held that while the Competition Commission is permitted to add new respondents after a complaint has been initiated, it cannot simply add them after the referral stage without following the proper legal process.
“A firm cannot be joined as a respondent after referral unless there has first been a valid initiation against that firm,” Justice Rogers explained in the judgment.
The court also concluded that most of the banks successfully demonstrated that the Commission had failed to establish a legally sustainable case against them.
Justice Rogers stressed that the case involved significant legal questions regarding how cartel cases must be pleaded before the Competition Tribunal.
The judgment stated that the appropriate question is whether, assuming all the Commission’s allegations are true, “the Tribunal, acting reasonably, could conclude that the Commission has made out a case for the relief claimed.”
The Constitutional Court also stressed that fairness applies to both regulators and respondents, and said that ‘fairness is not a one-way street – all parties have the right to fairness in conducting their cases.”