Competition Commission presses ahead to ConCourt with currency manipulation case

The Competition Commission’s long-running currency manipulation case against commercial banks is set to intensify, with the matter now heading to the Constitutional Court. 

The competition watchdog has approached the Constitutional Court to appeal against an earlier ruling that dismissed currency manipulation charges against 23 of the 28 implicated commercial banks based in South Africa and overseas. 

In January 2024, the Competition Commission suffered a major setback when the Competition Appeal Court dismissed the inclusion of most banks in its forex rigging case involving the US dollar-South African rand currency pair more than a decade ago. 

This is because the commission failed to support its case with evidence to prove that most of the banks conspired to manipulate the rand, and failed to demonstrate that the alleged actions of currency traders at banks harmed South Africa’s economy.  

The commission’s central argument is that currency traders at the 28 local and international banks entered into a general agreement or “single overarching conspiracy” to collude on prices for bids, offers and bid-offer spreads for spot trades in relation to currency trading. 

In doing so, they allegedly used platforms such as the Reuters currency trading platform and the Bloomberg instant messaging system (chat room), as well as telephone conversations and meetings, to coordinate their alleged collusive trading activities.

However, the Competition Appeal Court ruled that there was insufficient evidence proffered by the commission that joining the messaging systems or being part of them would automatically constitute traders partaking in a “single overarching conspiracy” to rig currency trades. 

The Reuters and Bloomberg information and messaging platforms, which the commission relied on for its case, were primarily platforms for news and not where trades were executed.

The commission even had basic facts wrong, such as incorrectly linking currency traders to banks they did not work for, and included in its case holding companies of banks that did not trade in currencies.

The Competition Appeal Court also dismissed the commission’s case because it did not have the jurisdiction to prosecute some international banks that did not have operations in South Africa. 

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The court dismissed charges against banks including Nedbank, FirstRand, Credit Suisse Group, Bank of America, Australia and New Zealand Banking, Commerz­bank, Nomura, HSBC Bank USA, Macquarie Bank and Standard Americas.

The court said five banks — BNP Paribas, JPMorgan, HSBC, Credit Suisse Securities and Investec — still have a case to answer. Apart from Investec, these banks have already pleaded guilty to charges brought by the US Department of Justice in 2015.

The dismissal of the commission’s case against most of the banks raised questions about the regulator’s ability to prosecute high-profile cartel cases or white-collar crimes. The commission is arguably petitioning the Constitutional Court to defend its credibility, which is on the line. 

Apex court appeal