South Africa’s Competition Commission in 2015 began an investigation which alleged that 23 local and foreign banks, including J.P. Morgan Chase, Bank of America Merrill Lynch and Credit Suisse, had colluded to rig the rand.
South Africa’s Competition Commission is seeking extraterritorial powers to prosecute foreign banks whose actions affect South Africans.
The call comes after a four-year investigation which alleged that 23 local and foreign banks, including J.P. Morgan Chase, Bank of America Merrill Lynch and Credit Suisse, had colluded to rig the rand. The banks themselves have dismissed the allegations and called for the probe to be closed.
The investigation found that beginning in 2007, a number of banks had agreed to coordinate prices for bids, offers and bid-offer spreads on spot dollar and rand trades.
The Competition Commission initially recommended fines totaling 10% of the banks’ global revenues, but the Competition Tribunal ruled that its jurisdiction did not extend to the imposition of fines against foreign banks.
“We prosecuted the banks before a tribunal, then foreign banks came and said we are not present in South Africa, the conduct also didn’t occur here, it occurred only in New York which is a foreign jurisdiction, you can’t touch us,” Competition Commissioner Tembinkosi Bonakele said last week, according to South Africa’s eNCA news network..
Earlier this month, the Commission responded by urging the tribunal to set a precedent to allow it to prosecute foreign institutions if their actions affect South African citizens.
Harry G. Broadman, partner and chair of the emerging markets practice at Berkeley Research Group, said both the Competition Commission and Competition Tribunal should look to exercise any authority they possess to use extraterritorial enforcement in coordination with international counterpart regulators.
“If the agencies believe the country’s current competition law does not provide for such authority, they should work with the other parts of South Africa’s government to consider making the necessary amendments to the law,” Broadman told CNBC.
A number of other countries, including the U.S., have clear extraterritorial reach to enforce national competition policies.
“In the case of the U.S., it stems from two complementary statutes—the Sherman Act and the Foreign Trade Antitrust Improvements Act,” Broadman explained.
“Those laws provide to US antitrust officials the authority to hold foreign firms and their suppliers importing products or services accountable for anticompetitive conduct under US law.”