Foreign banks can be charged, rules Appeal Court
Legalbrief Today Issue 4887
The Competition Appeal Court has given the Competition Commission the go ahead to re-charge 10 foreign banks with alleged price fixing. A BusinessLIVE report notes the commission first charged local and foreign banks with price-fixing the rand in 2015 and is seeking a penalty of 10% of each banks’ annual turnover. The ruling overturns the Competition Tribunal’s judgment and gives the commission authority over foreign banks or any foreign businesses whose anti-competitive behaviour ‘substantially’ affects SA. Ten international banks – with no presence in SA – appealed the charges saying they didn’t have to answer a case as competition authorities had no authority over them. The banks include Bank of America Merrill Lynch International, JPMorgan Chase, Australia and New Zealand Banking Group, Standard New York Securities, Nomura International, Macquarie Bank, HSBC Bank USA, Merrill Lynch Pierce Fenner & Smith and Credit Suisse. Competition Appeal Court Judge Dennis Davis sided with the commission and gave it the authority to charge foreign firms if their cartel actions had a real impact locally. However, Davis ruled that the commission has to show the banks have a ‘personal connection’ or link to SA. The new charges against the banks also have to show that traders allegedly manipulating the currency prices, knew it was ‘foreseeable that their alleged conduct would have direct or immediate, and substantial effect in SA’, said the commission in a statement. The commission also has, within 40 days, to resubmit charges against the local banks and must show how they worked together as a single cartel to manipulate the rand, if it wishes the case to go ahead.
The commission said it would re-file charges, adding it was ‘delighted’ with the ruling. But according to a Business Day report, an insider said the commission was celebrating a half victory as a full victory. This is because if the commission fails to make a convincing case showing foreign banks’ alleged price-fixing affected SA in a significant and a foreseeable manner, the banks could return to court to have the charges quashed. Davis had harsh words for the commission’s legal case in which it frequently added and modified charges. ‘The Competition Commission case appeared to resemble a movable jurisprudential feast,’ he said. Commission spokesperson Sipho Ngwema said: ‘The commission will file a new referral as directed by the court and will rectify whatever has to be corrected with regards to the case.’