The Competition Commission has taken its long-running rand-rigging case to the Constitutional Court, seeking to appeal a January 2024 ruling that dismissed its case against the majority of 28 local and international banks accused of manipulating the USD/ZAR exchange rate.
The country’s apex court began hearing the application for leave to appeal on Tuesday, 19 August, in a high-stakes legal battle that could have significant implications for the jurisdiction of South African authorities over foreign firms.
The case, which originated in April 2015, centres on allegations that traders from various banks colluded between 2007 and 2013. The commission claims they used online chat rooms, such as one reportedly named “ZAR Domination,” to coordinate their trading activities. This alleged collusion involved fixing prices and dividing markets for the US dollar-rand currency pair, which the commission describes as “the most egregious form of anti-competitive conduct.”
In an affidavit, Makgale Mohlala, manager of the commission’s cartels division, stated: “The manipulation impacted on the exchange rate of the South African rand, which in turn affected various parts of the South African economy — including imports and exports, foreign direct investment, public and private debt, companies’ balance sheets, with the attendant implications for the prices of goods and services and financial assets.”
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A decade-long legal battle over jurisdiction and conspiracy
The commission’s appeal targets a January 2024 decision by the Competition Appeal Court (CAC), which upheld appeals from 17 international banks, dismissing the case against them primarily on jurisdictional grounds. The CAC’s ruling restricted the case to a handful of banks, prompting the commission to escalate the matter.
The core of the commission’s argument is that the CAC erred by imposing new jurisdictional hurdles and that South African authorities should be able to prosecute extraterritorial conduct that has a direct effect on the local economy.
The banks, in turn, argue that the case lacks constitutional merit and that the commission has failed to plead a sustainable case after numerous opportunities. They have consistently denied allegations of a “single overarching conspiracy,” a central element of the commission’s case.
Legal representatives for the banks have argued that the evidence presented is flimsy, while international banks maintain that South African courts lack jurisdiction as the alleged conduct occurred outside the country. The prolonged nature of the rand-rigging allegations has also caused significant reputational harm to the institutions involved.
The four-day hearing, scheduled from 19 to 22 August, will determine whether the case against 13 banks—including three major South African banks and ten foreign institutions—will be revived.
Some banks have previously settled with the commission. Citibank paid a R69.5 million penalty in 2017, and Standard Chartered Bank settled for R42.7 million in 2023. Barclays Plc, which owns Absa, was granted immunity for cooperating. Regardless of the outcome, some analysts believe the fact that the rand-rigging case is being pursued demonstrates a commitment to regulatory oversight in South Africa.
Image: Adobestock.
