In a ruling that concludes years of jurisdictional sparring, the Constitutional Court of South Africa today handed down a definitive judgment regarding allegations of a global conspiracy to manipulate the South African rand.
The decision, delivered on 30 June, provides a roadmap for how South African competition authorities may prosecute foreign entities for conduct occurring outside the country’s borders.
Origins of the case
The roots of this litigation trace back to April 2015, when the Competition Commission initiated a complaint against 18 major banks. The Commission alleged that these financial institutions engaged in a Single Overarching Conspiracy (SOC) to manipulate the USD/ZAR exchange rate between 2007 and 2013. The litigation has since wound its way through multiple levels of the judiciary, involving two rounds of decisions from both the Competition Tribunal and the Competition Appeal Court (CAC).
At the heart of the dispute was a fundamental question of jurisdiction: can a South African tribunal hold a foreign bank that has no physical or legal presence in South Africa accountable for global conduct?
The Commission argued that Section 3(1) of the Competition Act, which covers economic activity having an “effect within” South Africa, effectively bypassed traditional common law requirements for personal jurisdiction. However, the Constitutional Court upheld earlier findings that personal jurisdiction still requires “adequate connecting factors” (the ACF test) between the complaint and the Tribunal. For subject matter jurisdiction, the Court endorsed the Qualified Effects (QE) test, which requires that the alleged conduct have a direct, immediate, and substantial effect within South Africa.
Finality in litigation
A significant portion of the latest judgment focused on the principle of finality in litigation. The Court ruled that the Commission was barred from reopening arguments regarding the interpretation of Section 3(1) because it had failed to appeal the Competition Appeal Court’s first judgment.
Invoking the principles of peremption and res judicata, the Court noted that allowing the Commission to revisit these arguments now would be prejudicial. “Finality had to prevail,” the Court noted, highlighting that the interpretation of the Act’s jurisdictional reach was not properly before it in this specific appeal.
Joinder and technical findings
The Court also clarified the requirements for joinder and initiation. It rejected arguments from banks like Nedbank and Standard Americas Incorporated (SAI) that they could not be joined to the proceedings late in the process. The Court held that a fresh initiation of a complaint is not necessary every time a new firm is identified, as the initiation process is directed at the prohibited conduct itself rather than specific firms.
In a detailed technical analysis, the Court addressed 13 alleged legal errors committed by the CAC. Notably, the Court refined how the knowledge of individual traders is attributed to their employers. It rejected the idea that a trader’s knowledge from a previous job could be used against a new employer unless there was evidence of continued anti-competitive conduct after the trader joined the new firm. The Court also dismissed the notion that the Commission had to name every specific trader to prosecute a firm for cartel conduct, treating such details as case-specific factual requirements rather than rigid legal rules.
Which banks remain in the case
The practical impact of the judgment presents both gains and setbacks for the Competition Commission. The Court conducted a bank-by-bank analysis to determine which institutions must still face the allegations. The Commission’s appeal was successful against JPMorgan Chase Bank N.A. and Standard Americas Incorporated (SAI), meaning they remain as respondents in the case. However, the Court dismissed the Commission’s appeal against several other major institutions, including Nedbank, FirstRand Bank, Standard Bank of South Africa, and several branches of Bank of America and HSBC.
Furthermore, the Court granted the appeal of Credit Suisse Securities (USA) LLC, setting aside the order that had joined them to the proceedings. Consequently, the Commission’s application to join Credit Suisse was dismissed.
What happens next
The Single Overarching Conspiracy case will now proceed at the level of pleading against a narrowed group of “active respondents”: BNP Paribas, JPMorgan Chase & Co, JPMorgan Chase Bank N.A., Investec, Standard Americas Incorporated, and HSBC Bank plc (HBEU).
The Court noted that the conspiracy, as pleaded, also involves Standard Chartered Bank, Citibank, Absa, and Barclays, though these institutions have already settled or received leniency.
While the ruling limits the number of banks facing immediate prosecution, it solidifies the legal framework, ensuring that global cartels cannot escape the reach of South African law if their actions demonstrably harm the local economy.
