- The Constitutional Court gave the Competition Commission a partial win in the forex cartel case.
- The judgment explains how cartel cases should be presented and when companies can be added to proceedings.
- The ruling will influence future competition cases that involve multinational businesses.
The Constitutional Court has handed the Competition Commission a partial victory in its long-running foreign exchange cartel case.
The unanimous judgment, written by Justice R Rogers, clarified how complex competition cases must be investigated, pleaded and prosecuted in South Africa.
It comes from allegations that local and international banks colluded to manipulate the exchange rate between the South African rand and the United States dollar from 2007 to at least 2013.
The Competition Commission began its complaint in April 2015, amended it in August 2016 and referred the matter to the Competition Tribunal in February 2017.
Since then, the litigation has passed through two Competition Tribunal decisions and two Competition Appeal Court judgments before reaching the Constitutional Court.
The apex court refused BNP Paribas leave to appeal, upheld Credit Suisse Securities (USA) LLC’s appeal against being joined to the case, partly upheld the Competition Commission’s appeal, and dismissed HSBC Bank plc’s cross-appeal.
The commission succeeded in restoring its case against JPMorgan Chase Bank N A and Standard Americas Incorporated after the Competition Appeal Court had dismissed the claims against them.
Understanding competition law
While the outcome affects several banks, the Constitutional Court said the broader importance of the case lies in clarifying the legal principles that govern competition litigation.
One of the key issues was the standard required when the Competition Commission presents a cartel case before the Competition Tribunal. The court rejected an overly technical approach and said the real question is whether the facts, if proven, could support the commission’s case.
Justice Rogers stated that if all the facts alleged in the referral affidavit are proved and no other facts are proved, the Tribunal should ask if the commission has made out a case for the relief it claims.
The court also clarified what the Commission must show when relying on a single overarching conspiracy involving many firms. It confirmed that the commission must provide enough facts to prove that each respondent intentionally took part in a shared anti-competitive objective, and that the alleged conspiracy linked foreign banks with South African banks when jurisdiction depended on those connections.
Adding more companies
Another important issue was whether the Competition Commission may add companies after a complaint has already been referred to the Competition Tribunal.
The court held that the Competition Act does not prevent adding companies after referral. Justice Rogers said new information may come up after referral through pleadings, discovery, witnesses or settlements and could reveal the involvement of more firms.
He rejected a rigid interpretation of the Act, saying that it would reward firms whose participation stays hidden the longest.
The court also found that a fresh complaint initiation is not always needed when more firms are identified later, explaining that complaint initiations are about prohibited conduct, not specific firms. In reaching that conclusion, the court clarified how its earlier decision in Pickfords should be applied.
Mixed outcome
Credit Suisse Securities (USA) LLC managed to overturn the Competition Tribunal’s decision to add it to the proceedings. However, BNP Paribas was not given leave to appeal, and HSBC Bank plc’s cross-appeal was dismissed.
The Competition Commission’s case will continue against several remaining respondents, and this judgment gives important guidance for future investigations involving multinational corporations and complex cross-border competition matters.
The Constitutional Court made no costs order in favour of or against the Competition Commission, finding that it had acted in good faith despite succeeding only in part.
Get your news on the go. Click here to follow the Conviction WhatsApp channel.
