Top court rules on rand manipulation allegations against Absa, FirstRand, Nedbank, and Standard Bank
The Constitutional Court unanimously dismissed the Competition Commission’s appeal against major South African banks, which it had accused of colluding to manipulate the rand.
The court 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.
The case dates back to February 2017, when the Competition Commission referred a complaint to the Competition Tribunal alleging that 18 local and international banks had colluded to manipulate the US dollar/rand exchange rate between 2007 and at least September 2013.
The Commission alleged that traders at the banks coordinated their trading strategies through electronic chatrooms, fixed bid-offer spreads, shared confidential customer information, and timed trades to influence the exchange rate.
Over the following years, numerous procedural disputes delayed the matter, preventing any evidence on the alleged manipulation from being heard.
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 Constitutional 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.
An end to almost a decade of litigation
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.”
The ruling effectively brings to an end the proceedings against Standard Bank, Nedbank, FirstRand Bank and several other major banks after almost a decade of litigation.
While the Commission achieved a limited victory in keeping its case alive against JPMorgan Chase Bank N.A. and Standard Americas Incorporated, its broader effort to pursue the remaining banks has now been rejected.
In response to the 30 June verdict, South Africa’s largest bank, Standard Bank, said that the ruling confirms what they have maintained since 2017, which is that neither the bank nor its employees ever conspired to manipulate the valuation of the Rand.
The full judgment can be viewed below.
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