The Competition Commission has updated the Portfolio Committee on Trade, Industry and Competition on its case against major local and international banks over the alleged manipulation of the ZAR/USD currency pair.

Reiterating the move in early February, the commission noted that the case is being taken to the Constitutional Court (ConCourt), as it applies for leave to appeal the Competition Appeal Court’s (CAC) judgment from January.

The commission is still pursuing its case against 19 of the initial 28 banks identified in the investigations.

The fate of 13 banks hinges on the ConCourt’s decision – while six other banks are compelled to answer for their involvement.

The commission said it will not appeal the CAC order in respect of four banks – Nedbank Group Limited, FirstRand Limited, Credit Suisse Group, and Standard New York Securities Inc.

The CAC said that these groups could not be joined in the complaint referral as they are holding companies which do not trade in forex.

Of the 28 banks initially pursued by the Competition Commission:

On 8 January, the CAC upheld an appeal by 19 of 23 respondent banks accused of price-fixing by the commission. The appeal was upheld on the grounds that the commission lacked the necessary jurisdiction as well as a lack of evidence.

The commission has been pursuing a case against 28 banks since 2015, including the big local banks and many other international banks, alleging that these groups colluded with each other to fix the foreign exchange rate in respect of the US Dollar and the South African Rand currency pair.

The respondent banks were ordered by the Competition Tribunal in March 2023 to file their answering affidavits in response to the commission’s complaint referral but objected to the order and appealed it to the CAC.

The CAC’s ruling had the effect of letting most of the respondent banks off the hook. Only four appeals were dismissed, leaving the commission with only four cases to be answered.

In its presentation to parliament, the Competition Commission said that the banks were released from the complaint referral before they answered any of the allegations against them – hence the decision to apply for leave to appeal with the ConCourt.

In its current application for leave to appeal, the commission is appealing the CAC order to the ConCourt against 13 of the respondent banks.

The commission said that the allegations the banks face include:

• Colluding on USD/ZAR currency pair by fixing bids; offers; bid-offer spreads; the spot exchange rate; and the exchange rate at the FIX.

• Dividing markets by allocating customers in terms of which one trader withholds or pulls his existing bid or offer from the market to allow the other trader to execute and complete his trade.

• Cartel behaviour: Buying and selling money on behalf of their clients as well as on their own behalf – either buying or selling USD with ZAR or ZAR with USD – and fixing of buying and/or selling price of these currencies and fixing the spread (profit margin);

• Traders taking turns to buy or sell currencies or giving each other opportunity to buy or sell currencies without interference from each other.

source:19 banks still on the hook in South Africa’s rand manipulation case – BusinessTech