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[2019] ZACT 50
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Competition Commission of South Africa v Bank of America Merrill Lynch International Limited and Others (CR121Feb17) [2019] ZACT 50; [2020] 1 CPLR 205 (CT) (12 June 2019)

competition
tribunal
SOUTH
AFRICA
COMPETITION
TRIBUNAL OF SOUTH AFRICA
CR121Feb17
[1]
In
the consolidated exception and joinder applications
In
re:
the complaint referral between:
THE
COMPETITION COMMISSION OF SOUTH
AFRICA
Applicant
AND
BANK
OF AMERICA MERRILL LYNCH
INTERNATIONAL
LIMITED
First
Respondent
BNP
PARIBAS
Second
Respondent
JP
MORGAN CHASE &
CO
Third
Respondent
JP
MORGAN CHASE BANK
N.A.
Fourth
Respondent
AUSTRALIA
AND NEW ZEALAND BANKING
GROUP
LIMITED
Fifth
Respondent
STANDARD
NEW YORK SECURITIES
INC
Sixth
Respondent
INVESTEC
LIMITED
Seventh
Respondent
STANDARD
BANK OF SOUTH AFRICA LIMITED
Eighth
Respondent
NOMURA
INTERNATIONAL
PLC
Ninth
Respondent
STANDARD
CHARTERED
BANK
Tenth
Respondent
CREDIT
SUISSE
GROUP
Eleventh
Respondent
COMMERZBANK
AG
Twelfth
Respondent
MACQUIRE
BANK
LIMITED
Thirteenth
Respondent
HSBC
BANK
PLC
Fourteenth
Respondent
CITIBANK
N.A.
Fifteenth
Respondent
ABSA
BANK
LIMITED
Sixteenth
Respondent
BARCLAYS
CAPITAL
INC.
Seventeenth
Respondent
BARCLAYS
BANK
PLC
Eighteenth
Respondent
HSBC
BANK USA, NATIONAL ASSOCIATION
INC.
Nineteenth
Respondent
MERRILL
LYNCH PIERCE FENNER AND SMITH
INC.
Twentieth
Respondent
BANK
OF AMERICA,
N.A.
Twenty-first
Respondent
INVESTEC
BANK
LIMITED
Twenty-second
Respondent
CREDIT
SUISSE SECURITIES (USA)
LLC
Twenty-third
Respondent
Panel:
Norman Manoim (Presiding Member)
:
Yasmin Carrim (Tribunal Member)
:
Mondo Mazwai (Tribunal Member)
Heard
on: 30 July- 03 August 2018
Order
and Reasons issued on: 12 June 2019
REASONS
FOR DECISION AND ORDER
Introduction
[1]
The Competition Commission ('Commission') has indicted 23 banks -
some local, some foreign - for fixing the rand-dollar exchange
rate.
They are alleged to have contravened sub-sections 4(1)(b)(i) and (ii)
of the Competition Act, no 89 of 1998, (the Act), which
prohibits
competitors from engaging in agreements or concerted practices to fix
prices and divide markets.
[2]
All the banks have raised objections to these charges. Some of the
Banks' objections relate to whether the Commission has jurisdiction

over them, others relate to whether the case has prescribed, and all
complain that the complaint referral lacks particularity.
[3]
To add to the complexity that
surrounds this case, five of the respondents, (HSBC Bank USA,
National Association Inc ('HBUS') (19);
Merrill Lynch Pierce Fenner
And Smith Inc. ('MLPFS') (20); Bank of America, N.A. ('BANA') (21);
Investec Bank Limited ('Investec')
(22); and Credit Suisse Securities
(USA) LLC ('Credit Suisse Securities')(23)) were not part of the
original referral and the Commission
seeks to join them as
respondents in these proceedings; of these, four object to the
application for joinder which we must also
decide.
[2]
[4]
The Commission rejects all these objections and seeks their dismissal
so that the case can continue. It is worth noting that
although the
case was referred to the Tribunal on 15 February 2017, none of the
respondents has filed an answer. The respondents
feel justified in
not having done so, given the centrality of objections they have
raised; conversely, the Commission feels frustrated
with the slow
pace of this litigation and accuses the respondents of foot dragging.
[5]
Investec Limited (7) and Investec Bank Limited (22) (collectively
'Investec') consider that the Commission only has itself to
blame for
this procedural inertia and, unusually, asks us to grant an order of
censure as a mark of disapproval of the Commission's
conduct in this
litigation.
[6]
The objections took five days to argue. This may seem a long time,
but it may have taken even longer, had not all parties agreed
in
advance to having time limitations placed on them for reasons of
efficiency. We appreciate that all parties respected this request.
[7]
This decision is divided into several parts. The first part contains
a chronology of the history of the litigation. This while
seemingly
tedious is necessary for two reasons - to understand the exceptions
raised and the context for the declaratory order
of censure sought by
Investec.
[8]
Next, in Part 2, we consider the objections raised by some of the
respondents to our jurisdiction to hear this complaint. as
they
allege they are
peregrini
i.e. firms that are neither
domiciled nor carry on business in the Republic. We have, as the
argument before us went, distinguished
between those respondents who
are 'pure'
peregrini
i.e. those neither domiciled nor carrying
on business in the Republic and those who are 'local'
peregrini
i.e. those firms with some presence in the country. We explain
these terms and their legal significance later.
[9]
Next, in Part 3 we deal with a range of objections, which raise
issues around the adequacy of the pleadings and, also, another

jurisdictional challenge, this however based on prescription.
[10]
Finally, in Part 4 we deal with the declaratory order of censure
sought by Investec.
Part
1
Chronology
[11]
The Commission referred this complaint to the Tribunal against the
first 19 respondents on 15 February 2017. The referral contained
a
notice of motion and an affidavit of 26 pages (the February
affidavit).
[12]
One respondent, Citibank N.A,
the fifteenth respondent, has settled with the Commission byway of a
consent agreement and paid an
administrative penalty.
[3]
It has not participated any further in the current proceedings. The
Commission states that it does not seek a penalty against the
sixteen
to eighteenth respondents, respectively, ABSA Bank Ltd, Barclays Bank
Inc. and Barclays Bank PLC.
[4]
It is understood these firms may have applied for leniency. They have
also not participated in these proceedings.
[13]
By 3 March 2017 most of the remaining respondents had either filed an
exception to the referral or sought further particulars
from the
Commission.
[14]
On 10 March 2017 the Tribunal
convened a pre-hearing at which a timetable for the further conduct
of proceedings was agreed to.
Mr Maenetje, who at the time was acting
for the Commission, indicated that the Commission wished to
supplement its papers to address
a number of the concerns raised by
the respondents in their exception applications.
[5]
The timetable made provision for the Commission to file a
supplementary affidavit by no later than 31 March 2017. Thereafter
the
respondents were given the opportunity to revisit their exception
applications. A further pre-hearing was scheduled for 23 June
2017.
The exception applications were set down to be heard on 21-23 July
2017.
[15]
On 31 March 2017 the Commission
filed its first supplementary affidavit (the March affidavit). This
affidavit was six pages long
and addressed only the issue of
jurisdiction, doing little else to address the plethora of exceptions
raised by the respondents.
On 7 April 2017, the Commission filed a
second supplementary affidavit (the April affidavit). The April
affidavit was limited to
rectifying an omission contained in the
March affidavit.
[6]
[16]
On 10 May 2018 the Commission wrote to the Tribunal requesting that
the Commission set down the exceptions raised by Standard
Bank South
Africa (SBSA) on a separate and expedited basis. The Tribunal
refused.
[17]
On 23 June 2017 the Tribunal
convened a second pre-hearing to establish the procedure for the
hearing of the exception applications
on 20 and 21 July 2017. At the
pre-hearing, the Commission indicated that it would not provide any
further particulars to answer
the exceptions, insofar as they alleged
that the referral was vague and embarrassing i.e. the Commission was
indicating that it
considered the pleadings were adequate and it
would argue for the dismissal of the exceptions on this ground.
However, in relation
to those exceptions which raised issues around
misjoinder, the Commission tendered to re-assess its position and
provide further
particulars. It also tendered to provide Investec and
Standard Chartered Bank with the further particulars which they had
requested.
[7]
In light of these tenders, the Tribunal removed the exception
hearings from the roll for re­ enrollment at the request of the

parties.
[18]
The attitude of the Commission changed after the June pre-hearing. It
did not provide the tendered information to Investec
and Standard
Chartered Bank, nor did it provide further pleadings in relation to
the misjoinder point. Instead, it wrote to the
Tribunal requesting
that the Investec and Standard Bank exceptions be set down on a
separated and expedited basis. The Tribunal
issued a directive
setting a timetable for the Commission to bring a formal separation
application which was set down for hearing
in late August 2017. The
timetable required the Commission to file its application by 24 July
2017.
[19]
Before filing its separation
application, the Commission filed applications for default judgement
against six of the respondents.
[8]
The basis for these applications was broadly that the respondents had
neither filed an answer to a referral nor had they filed
'formal'
exception applications.
[9]
The Tribunal directed that the default judgment applications and the
separation application should be heard on the same day, 24
August
2017.
[20]
But on 24 August 2017, the
Commission abandoned its default judgement applications.
[10]
However it persisted with its separation application.
[21]
The Tribunal dismissed this application in an order dated 5 September
2017. The Tribunal further ordered that the exceptions
were to be
heard in a combined hearing, over three days, in January 2018, with
heads of argument being filed by the respondents
no later than 24
November 2017.
[22]
On 6 November 2017, two weeks before the respondents were due to file
their heads of argument, the Commission's representatives,
at 19:05
in the evening, filed a further supplementary affidavit. The covering
email read:
"Kindly take notice that the
Competition Commission's further supplementary affidavit is served
and filed of record evenly
herewith. Due to its size, the attachment
will be sent in 9 batches, this is batch 1 and 2."
[23]
The documents attached to the email comprised a 60-page supplementary
affidavit and 100 pages of annexures. To emphasise -
this
supplementary affidavit (November affidavit) was submitted without
any forewarning from the Commission, in a context where
it had
expressly stated on the record that it would not supplement its
papers further. Moreover, this occurred two weeks before
the
respondents were required to file their heads of argument in their
exception applications.
[24]
The matter was made all the more extraordinary, when the next
morning, at 08:46, the Commission's representatives sent an email
to
all parties which, without further explanation, simply stated:
"The
Commission withdraws the correspondence below and all attachments
forwarded'.
[25]
The representatives of the respondents, understandably concerned,
wrote to the Commission to seek clarity on the nature of
the
submissions and whether the Commission still intended to make use of
the supplementary at a later stage. No clarity was forthcoming
from
the Commission.
[26]
The respondents still submitted their heads of argument by 24
November 2017. Since the purported November affidavit from the

Commission had been withdrawn, most respondents confined their
submissions to the extant referral (February) and its two amendments

(March and April). In terms of the timetable, the Commission was due
to file its heads of argument, which were meant as a response
to
those of the respondents, by 8 December 2017. It did not do so.
Instead, on 10 December 2017, the Commission submitted a letter
in
which it indicated that it:
"Has decided to file a
supplementary affidavit to provide additional particularly to the
initial referral and to dispose of
a number of the vague and
embarrassing exceptions raised by the respondents. It does so without
any concession that such further
particularity is required or
necessary."
[27]
The Commission thereafter submitted a further supplementary affidavit
on 20 December 2017 (the December affidavit). The supplementary
not
only sought to further particularise the claims of its February
referral, but also sought to join five new parties: HBUS (19);
MLPFS
(20); BANA (21); Investec (22); and Credit Suisse Securities (23).
The five new parties were all allegedly part of the corporate
family
of some existing respondents and the Commission's intention through
the joinder application was to ensure that the correct
party was
before the Tribunal.
[28]
The December affidavit was, unlike its two predecessors, a
substantial document. Since the exceptions had been based on the

original February affidavit the December affidavit had potentially
rendered them moot or at least might have changed the criticism

originally levelled. Accordingly, the Tribunal issued a direction
postponing the hearing set down on 24-26 January 2018. Instead
on the
first of those days a pre-hearing was held when further directions
were issued.
[29]
The exceptions of all the respondents would be heard at the same time
and also the Commissions' application to join the five
new
respondents. Five days were set down for this hearing from 30 July
2018- 3 August 2018. Despite the fractured history of this
case, this
time the matter ran to plan on those dates.
Part
2 Jurisdiction
[30]
As mentioned in the introduction, several respondents argue that the
Tribunal has no jurisdiction over them.
[31]
The 23 respondents before us
can be classified into three categories. The first are
incolae
of South Africa meaning
that they are South African firms with registered offices in South
Africa, and conduct business in South
Africa. These are Standard Bank
of South Africa Limited ('Standard Bank') (8) and lnvestec.
[11]
These respondents have not challenged the Tribunal's jurisdiction
over them.
[32]
The second category of respondents are what everyone during the
hearing termed 'pure
peregrini'
meaning foreign firms with no
local presence or business activity in South Africa. Of the 19 firms
which excepted to the referral,
nine are 'pure'
peregrini.
These
firms are: Bank of America Merrill Lynch International Limited
('BAMLI') (1); JP Morgan Chase & Co ('JP Morgan') (3);
Australia
and New Zealand Bank Limited ('ANZ') (5); Standard New York
Securities Inc ('SNYS') (6); Nomura International PLC ('Nomura')
(9);
Macquarie Bank Limited ('Macquarie') (13); HBUS (19); MLPFS (20) and
Credit Suisse USA (23).
[33]
The third category of respondents are seven firms which are also
peregrini,
but which have a representative or branch office in
South Africa. To distinguish them from the category of pure
peregrini
we have referred to them as 'local
peregrinl.
These are
BNP Paribas (2); JP Morgan Chase Bank N.A ('JP Morgan Bank') (4);
Standard Chartered Bank (SCB) (10); Credit Suisse Group
(11);
Commerzebank AG ('Commerzebank') (12); HSBC Bank PLC ('HBEU') (14);
and BANA (21).
[34]
The respondents argue that for the Commission to succeed it must
establish that the Tribunal can exercise both personal and
subject
matter jurisdiction over them. The pure
peregrini
argue that
the Commission has established neither. The local
peregrini,
except for one, base their objection on Jack of subject matter
jurisdiction. We go on to explain these terms and how they apply to

the respective categories of respondents.
Personal
jurisdiction: General
[35]
There was general agreement on the present state of the common law
governing personal jurisdiction over a
peregrinus.
The guiding
principle here is that of effectiveness. For that reason, personal
jurisdiction over a
peregrinus,
which has not submitted to the
forum's jurisdiction, can only be achieved either where the firm has
a physical presence in the country
or if not, where there has been an
attachment of the
peregrinus'
property in the country where
jurisdiction is being asserted.
[36]
Since it is common cause that there has been no submission or
attachment of the property of any of the pure
peregrini
this
point does not need to be considered any further. The debate that
remains over personal jurisdiction is whether there is some
other
basis for personal jurisdiction to be asserted over them, or indeed
whether it is required in terms of the
Competition Act.
[37
]
It is best to start with the
arguments advanced by the Commission on this aspect. The Commission
first argued that the common law
on this aspect should not be viewed
as static and was evolving to meet the needs of our constitutional
dispensation and a modern
economy. Noting that notions of attachment
had their roots in a nascent market economy where trade was typically
associated with
the physical movement of goods, it is not surprising
that attachment was seen as a prerequisite for jurisdiction over a
peregrinus
with
no presence in the forum. However, the advent of a modern economy
suggests that these concepts need to be revisited. Commercial
actors,
as in this case, are able to trade instantaneously with counter
parties situated in other countries using electronic communications.

Payments subsequent to these trades, if necessary, can also be
effected through cyberspace. In short, traders can contract with
one
another in other jurisdictions without having at any stage to leave
their own. Yet the trades may still have an effect on the
other
jurisdiction. Put another way the internet has made trading possible
across borders without the need for the one trading
party to have any
physical presence or tangible asset situated in the jurisdiction of
its counterparty. Accordingly, the Commission
argued the principle
underlying attachment to secure jurisdiction, which is premised on
effectiveness has ceased to have any economic
rationale. Moreover,
even if there was attachment in the forum, there may be no reasonable
relationship between the amount a plaintiff
seeks to enforce, and the
property sought to be attached. Put differently, the invocation of
attachment to found jurisdiction is
now more driven by historic
ritual rather than any credible claim to its effectiveness.
[12]
[38]
The logic of this argument is very appealing. However, there is
nothing to suggest that at this point in time the common law
has yet
evolved to recognize this. Certainly, we were not referred to any
case where this had been decided.
[39]
To get around this problem, the Commission argued that some recent
court decisions indicate that the common law on personal
jurisdiction
is in the process of change; moving away from the strict adherence to
orthodox common law requirements, to a more
flexible approach to
asserting personal jurisdiction over
peregrini.
[40]
However, there is nothing in
the cases to which we were referred, to suggest that the courts have
yet reached that stage in relation
to attachment requirement. In
Strang,
[13]
a decision by the Supreme
Court of Appeal (SCA), the court found that the arrest of a person to
found jurisdiction was unconstitutional.
The court was thus, in this
respect, altering one aspect of the common law. But the court made it
clear that this finding on arrest
did not alter the law on attachment
as the following passage illustrates:
"Why that is important is
because if arrest were unconstitutional and it were further held that
in this case, and cases like
it, jurisdiction can competently be
established without arrest, the necessary corollary would be that it
can also be established
without attachment despite the need for
attachment not having been an issue and despite attachment, generally
not being unconstitutional.
I do not mean to say that where
attachment is possible it is no longer a jurisdictional
requirement.”
[14]
[41]
In
Strang
the court also repeated the
rationale for the principle of effectiveness: "...
jurisdictional principles
have originated because courts have always sought to avoid having to
try cases when their judgments will,
or could prove hollow because of
the absence of any possibility of meaningful execution in the
plaintiff's jurisdiction.
"
[15]
[42]
However, in
Strang
the court also stated, and this is what the
Commission sought to rely on, that jurisdiction would be sufficiently
established if
the foreign
peregrini:
"were
served
with the summons while in South Africa
,
and in addition there were
a
n
adequate connection between the suit and the area
of
iurisdiction of the South
African court concerned from the point of view of appropriateness and
convenience of its being decided
by that court."
[16]
[Our emphasis]
[43]
The concept of an 'adequate
connection' was further developed in the later case of
Multi-links.
[17]
Here the
peregrinus
firm in question had no
physical presence in the country and there had been no attachment of
its assets in South Africa. Nevertheless,
the court held it had
jurisdiction over the
peregrinus
firm by applying a
'connecting factors' test. Apart from the fact that the
peregrinus
firm had accepted service
on its legal representatives in South Africa the court identified
eight connecting factors to the jurisdiction
of a South African
court.
[18]
[44]
There was much debate between the Commission and respondents as to
whether
Multi-links
had altered the common law on attachment
and replaced it with the connecting factors test.
[45]
But none of these factors are present on the facts of this case to
connect any of the pure
peregrini
to South African
jurisdiction. This means it is not necessary for us to decide whether
Multi-links
has extended the common law on personal
jurisdiction to dispense with the requirement of attachment if there
are otherwise adequate
connecting factors. Nor, unlike, in
Strang
was there service of a summons in the Republic on any of the pure
peregrini.
[46]
Finally, the respondents emphasized that despite this appeal to a
purposive approach by the Commission, the risk that a Tribunal

decision could prove "hollow"- the problem referred to in
Strang
in the passage we cited earlier- would remain. They
referred to the fact that the Commission's investigative powers could
not be
exercised against the pure
peregrini
because a summons
could not be effected against them in the foreign jurisdictions. Not
all these arguments were convincing as these
problems would remain
even if the Commission had been able to effect an attachment of
property. They relate to the practicality
of evidence gathering, a
matter of prosecutorial discretion rather than personal jurisdiction.
[47]
However, the respondents also
made the point that in terms of the Act, a Tribunal order is
enforceable
"... as if
it were an order of the High
Court".
[19]
If under common law a High Court would not have jurisdiction, it
seems to follow that such an order would also be "hollow"

if given by the Tribunal. At best the Tribunal's common law
jurisdiction must at least be co-extensive to that of a High Court.

Indeed, the latter would, because of inherent jurisdiction, have
greater powers to assume jurisdiction than would a creature of

statute such as the Tribunal.
[48]
The Commission next relied on an argument that section 3(1) of the
Act, the section that deals with jurisdiction, impliedly
dispenses
with the common law requirement for personal jurisdiction. This
section states:
“
This Act applies to all
economic activity within, or having
an
effect within, the
Republic, except..."
[49]
The Commission argued that if
the requirements of this section are met then the Tribunal has
jurisdiction. As we understood this
argument, the Commission appeared
to be contending that the statute ousts the requirement for personal
jurisdiction. Cartels situated
outside of our borders and with no
property to attach in the Republic could harm our economy with
impunity. For these reasons,
invoking constitutional values, the
competition authorities, which serve a public not private interest,
must be empowered to act
to achieve the purposes of the Act which
include
inter alia
to
"...
provide consumers
with competitive prices and product choices".
[20]
[50]
There is no suggestion by any of the pure
peregrini
that any
other country in which they are situated is asserting jurisdiction
over this conduct. There is thus no problem of comity
at issue in
this case. This raises the question of whether in the face of an
enforcement gap, a public body such as the Commission,
acting in the
interests of safeguarding South African consumers, can ask for
jurisdiction to be exercised over conduct based only
on proof of
effect in the absence of personal jurisdiction.
[51]
Although the Commission did not argue this point, some writers in the
international law literature have recognized what is
termed a
principle of subsidiarity. That is when a state with a more tenuous
nexus, the so-called bystander state, could still
assert jurisdiction
where the State with better contacts fails to do so. According to
Ryngaert:
"In economic law, especially
antitrust law, the jurisdictional subsidiarity principle appears to
have taken the form of an
economic principle that allows for the
exercise
of
extraterritorial
jurisdiction when such would increase global welfare, in the face of
inaction of States with stronger links, e.g.
States condoning or even
encouraging export cartels or corrupt practices.
'
[21]
[52]
While we have a lot of sympathy with this argument, it is difficult
to read an implied repeal of a common law requirement for
personal
jurisdiction into the text of the Act. Moreover, we were not given
any authority where this approach has been adopted
in the
interpretation of any other statute.
[53]
Section 3(1), as the respondents in our view correctly
contended, deals not with personal jurisdiction, but subject matter
jurisdiction.
It sets the test for what kind of economic activity
would give rise to subject matter jurisdiction. It does not follow
that as
a result of doing so the legislature has dispensed with the
requirement of personal jurisdiction. To do so would require one to

read all
"economic activity within or having an effect
within"
as a connecting factor. Since its ordinary language
is more suggestive of it being a subject factor, this means if one is
to follow
the Commission's approach, it has to be given a dual
meaning i.e. implying the legal basis for both personal and subject
jurisdiction.
But to do so would require an expansive interpretation.
The Tribunal should be cautious in coming to such a conclusion to
overturn
a long settled common law requirement.
[54]
We find that there is no basis to rely on section 3(1) to
dispense with the common law requirement to establish personal
jurisdiction
over a
peregrinus.
[55]
Finally, in reply, the Commission argued that the Tribunal could
still grant a declaratory order against the pure
peregrini.
This
suggestion had followed questions the panel had asked of the
respondents during their argument about whether the Tribunal could

exercise jurisdiction over a foreign cartel for the purpose of a
declaratory order.
[56]
The Commission argued that the Tribunal could give such an order. As
we understood its position in final argument, it had conceded
the
practical difficulty of imposing a penalty remedy on the pure
peregrini.
This seems to have been informed by the problem of
establishing whether these firms had any turnover in the Republic on
which a
penalty could be levied. Section 59, which deals with
administrative penalties, states that a penalty must be based on the
firm's
turnover in, the Republic or its exports from the Republic. It
is not clear if the pure
peregrini
would qualify for having
either, otherwise no doubt the Commission would have had something to
attach.
[57]
The respondents argued that the principle of effectiveness applied
equally to a declaratory order and hence this did not aid
the
Commission in avoiding the requirement to establish personal
jurisdiction.
[58]
The respondents point out that a declaratory order has subsequent
consequences that impact on the requirement of whether an
effective
order can be given. For instance, civil liability may follow by
virtue of section 65 of the Act. Secondly, a declaratory
order has
consequences for penalising future conduct in the event of
recidivism. For instance, section 59 makes a repeat offence,
a factor
to be taken into account, implying the possibility of greater
liability for the subsequent contravention.
[59]
We agree with the respondents that a traditional declaratory order-
one that has civil and penalty consequences is not an order
we can
competently give without personal jurisdiction over a
peregrinus
respondent.
[60]
However, that does not mean we are barred from issuing any other form
of declaratory order.
[61]
If the Commission is able to establish its section 4(1)(b) case
against all or some of the respondents, a typical declaratory
order
would state which firms would have been found to have participated in
that conduct. There seems to be no bar to such an order
being made
against any pure
peregrinus
firm in this case, provided the
declaratory order is limited in effect. This is what we have done in
paragraph 3.3.1 of our order,
where we exclude the application of any
such order from the provisions in the Act, relating to civil (section
65) and further penalty
liability (section 59).
[62]
Is there any point in such a declarator if it has no effect? We
consider that there is. Such a declaratory order is important
to make
in cartel enforcement because whilst the Tribunal may lack
enforcement jurisdiction it is still a matter of public interest
in
fighting the scourge of cartels, to pronounce upon the conduct of
foreign firms whose conduct has harmed South African consumers.
It
would be wholly artificial to limit a declaratory order to include
only the names of firms over whom the Tribunal has jurisdiction,
when
in fact the cartel also comprised firms over whom it does not have
jurisdiction. The principle of effectiveness is not compromised
by
such an approach because the declarator does not require any
subsequent enforcement action to be taken against the pure
peregrini.
[63]
Such a declaration may also prevent problems for a civil claimant
claiming damages from members of a cartel over whom there
is
jurisdiction. Because of the bifurcated nature of claims for damages
under the Act, where the Tribunal determines liability,
while a civil
court determines damages with neither having overlapping
jurisdiction, the framing of the declaratory order by the
Tribunal is
decisive for the ambit of the subsequent damages case. In terms of
section 65(6)(b) of the Act, the plaintiff in the
civil matter is
required to file with the Registrar of the civil court a certificate
from the Chairperson of the Tribunal certifying
that the conduct
constituting the basis for the action has been found to be a
prohibited practice under the Act. The Act further
provides in
section 65(7) that the certificate is ".
..conclusive proof of
its contents, and is binding on a civil court".
[64]
This means if a certificate mentioned only those firms over whom the
Tribunal had jurisdiction, the certificate could prove
under
inclusive in a later civil trial, if the plaintiff sought to rely on
evidence of agreements or communications with the pure
peregrini
cartel members. Note this
is something different to holding those pure
perigrini
liable. Rather, it is
evidence to assist the plaintiff to claim against those respondents
over whom there was jurisdiction, by allowing
the conduct to be fully
certified, which means naming all those found to have participated.
That this is not too fanciful a concern,
is illustrated by
City
of
Cape
Town v WBH0,
[22]
a recent civil case where
the issue of whether a certificate was under inclusive in the
description of who participated in the cartel,
was an issue. The
plaintiff had attempted to amend its particulars of claim, to include
the names of firms which it alleges were
part of the cartel, but
whose names did not appear in the certificate. The respondent had
resisted an amendment to this effect
even though it had been named
and no relief was being sought against the other alleged cartelists.
While the High Court allowed
the amendment and did not take an overly
technical approach to the problem, later courts may see the matter
differently.
[23]
[65]
Including the names of firms who participated in a cartel, despite
the Tribunal not having jurisdiction over them, by making
a
declaratory order of the limited scope contemplated above, strikes a
balance between considerations of effective jurisdiction,
the public
interest in fighting cartels, and the rights of private plaintiffs
not to have their claims against firms over whom
we have jurisdiction
compromised on technical grounds.
[66]
In making this order we recognise that all the pure
peregrini
respondents would retain the rights of any other respondent over
whom we have jurisdiction to defend themselves against such an order,

which would, if given, have reputational consequences for them.
Whether they wish to participate on this basis is obviously their

choice.
Personal
jurisdiction
-
local
peregrini
[67]
We now consider whether we have jurisdiction over the so called local
peregrini.
[68]
Seven of the respondents are alleged to be local
peregrini
because
they have some form of presence in South Africa.
[69]
Out of these firms, four have a local branch in South Africa and are
registered as authorised dealers in terms of the Banks
Act. They are:
69.1 BNB Paribas (2);
69.2 JP Morgan Chase Bank (4);
69.3 SCB (10); and
69.4
HBEU (14).
[24]
[70]
The remaining three the Commission alleges have what is termed a
representative office in South Africa. They are:
70.1 Credit Suisse Group (11);
70.2 Commerzbank (12); and
70.3 BANA (21).
[25]
[71]
Under the common law a court has jurisdiction over a
peregrinus
that conducts business in South Africa in respect of any cause of
action which arose out of its activities here.
[72]
The four respondents which are registered as authorized dealers do
not place in dispute that by virtue of this they carry on
business in
South Africa.
[73]
The argument became more complicated in respect of the other three.
At least one of them argued that mere existence of a local
office was
insufficient to meet the requirement that the firm carried on
business in South Africa.
[74]
This argument hinged on the
provisions of the Banks Act.
[26]
That Act states that a foreign bank may not establish a
"...representative
office in the Republic without having previously obtained the consent
of the Registrar'
[27]
[75]
But in terms of section 34(4) of the Banks Act a representative
office may not conduct the business of a bank in South Africa.
[76]
It follows, so it was argued, for these local
peregrini
that
if they were banks which could not conduct the business of a bank in
South Africa, they were not for jurisdiction purposes,
conducting a
business in South Africa.
[77]
However, there is nothing in the Banks Act which precludes a
representative office from carrying on business in South Africa
as
long as it is not the business of a bank. If it were otherwise there
would be no point in requiring foreign banks to register
their
representative office.
[78]
The term representative office is defined in the Banks Act in
relation to a foreign institution as
" ...premises situated
within the Republic from which the business referred to in section
34(1) and conducted by such foreign
institution in the other country
is promoted or assisted in any way".
[79]
Case law suggests that the jurisdictional requirement of carrying on
business is satisfied if the foreign corporation is permitted
to do
business in the local forum.
[80]
In an American case that has been cited with approval in South
African case law ever since, the following was stated very
succinctly:
“
Where a corporation created
in one jurisdiction is permitted
to
do business in another, it
is deemed
to
be
resident and subject to the jurisdiction of the courts
of
the latter, in all matters
founded upon contracts made or causes of action arising there.
”
[28]
[81]
The Banks Act makes it clear that a representative office, is an
office where the business of the foreign institution is promoted
or
assisted. This, put in different words, is carrying on business.
[82]
There is no common law authority that we were referred to which has
held that the requirement of carrying on business means
business of
the same nature as that that gave rise to the cause of action. The
fact that these respondents do not conduct currency
exchange
transactions or may not accept deposits as a typical bank would in
South Africa is not a prerequisite for purposes of
jurisdiction. All
that is required of a respondent is that it carries on a business in
South Africa.
[83]
We therefore find that the Commission has alleged sufficient facts to
establish the Tribunal's personal jurisdiction over the
seven local
peregrini.
Subject
matter jurisdiction
[84]
Recall that to establish jurisdiction over a
peregrinus
the
requirements of both personal jurisdiction and subject matter
jurisdiction must be met.
[85]
All the
peregrini
respondents argue that the Tribunal does not
have subject matter jurisdiction over them. Since we have found that
the we do not
have personal jurisdiction over the pure
peregrini
this topic remains relevant only for the seven local
peregrini.
[86]
The essence of the argument is that the Commission has not pleaded
the necessary facts to establish subject matter jurisdiction
over the
firms.
[87]
To reduce the argument to its simplest form: If two foreign based
traders are involved in a cartel, the Tribunal will only
have subject
matter jurisdiction if the cartel has, in the language of section
3(1), an economic effect in South Africa.
[88]
Effects based jurisdiction is not a new problem for courts grappling
with jurisdiction in competition law cases to decide.
[89]
The dilemma is best summed up
in a quote from American academic Professor Eleanor Fox who stated:
"Competition law is
national, markets are global, there is the rub."
[29]
[90]
Put differently what is being said is that cartel effects may spill
over borders, but competition enforcement is limited by
borders.
[91]
Nevertheless, courts in competition cases have applied the effects
doctrine to address these problems.
[92]
Perhaps most influential as a doctrine has been the United States'
test for effects.
[93]
Under the US Foreign Trade Antitrust Improvement Act of 1982 (FTAIA),
the Sherman Act does not apply to conduct involving trade
or commerce
with foreign nations unless it meets the effects exception test. As
the US DOJ and FTC guidelines explain:
"What is commonly referred to
as the FTAIA's 'effects exception' brings such conduct back within
the reach
of
the
Acts if the conduct has direct, substantial and reasonably
foreseeable effect on commerce within the United States, US import
commerce or
the
export commerce within the United States, US import commerce, or the
export
commerce
of
a US exporter, and that effect gives rise to
a
claim.”
[30]
[Our emphasis]
[94]
Similar language has been used
by courts in Europe. Thus, in
lntel,
[31]
the General Court explained that in European case law, two approaches
had been followed to establish jurisdiction, consistent with
the
rules of public international law; the principle of territoriality
and the qualified effects test. Under the territorial principle

courts held that conduct had two elements - the formation of an
agreement and its implementation. Even if only the implementation

took place within the territory of the forum the courts would still
find they had jurisdiction over the conduct, otherwise as the
court
explained "...
the
result would obviously be to give undertakings an
easy
means of evading those
prohibitions.
''
[32]
[95]
The General Court then went on
to discuss the second approach, the effects test as qualified in the
case law. This history, the
court explained, can be traced back to a
case in which the issue was whether EU merger regulation applied to a
concentration (merger).
In
Gencor,
decided in 1999, the court
explained the test was whether it was foreseeable the proposed
concentration would have an immediate
and substantial effect in the
European Union.
[33]
This was the test then adopted by the General Court in
Intel,
even though this was an
abuse of dominance case.
[96]
The case went on appeal to the European Court of Justice, but on this
point that court affirmed the correctness of this approach
holding:
" ..as the General Court held
...the qualified effects test allows the application of EU
competition law to be justified under
public international law when
it is
foreseeable
that the conduct in question will have an immediate and substantial
effect in the European Union.
'
[34]
[Our emphasis]
[97]
The European test and the US test, on the face of it, are similar,
but there are subtle differences. First, under the US test,
'direct,
substantial and reasonably foreseeable' are each self-standing
criterion. Under the EU test, the criterion of foreseeability
is
given its content by the two other criteria - an effect that
immediate and substantial. Second, the EU has preferred the term

'immediate' to the term 'direct' that the US statute uses. But in
most cases these distinctions may be insignificant.
[98]
Our courts in South Africa have
nevertheless in a case decided on exception, had cause to consider
the content of the effects test.
In
Ansac
[35]
the Competition Appeal Court had been referred not to the text of the
FAIA Act but to the US
Restatement
(Third) of the Foreign Relations Law of the United States.
The
court went on to state:
"The question is not whether
the consequences of the conduct is criminal or, for that matter,
anticompetitive, but whether
the conduct complained of has
'direct
and foreseeable' substantial consequences within the regulating
country
.
”
[36]
[Our emphasis]
[99]
Although
Ansac
went on appeal to the SCA,
the SCA did not pronounce further on this point, but it did seem to
approve of the CACs' reasoning on
a related point that the section
3(1) enquiry did not involve a question of whether the effects were
positive or negative. Nevertheless,
it quoted with approval the
following from the CAC decision that the issue was: "...
merely
whether there are sufficient jurisdictional links between the conduct
and the consequences
”
[37]
[100]
We can therefore assume that our law follows the same approach as
does US law and European law to subject matter jurisdiction
for
competition law cases. More specifically that through the lens of
section 3(1) we adopt an effects-based test that is qualified.

Perhaps the clearest formulation to adopt is that of the EU in
Intel
viz. that it is
foreseeable that the conduct will have
a
direct or immediate, and substantial effect in the Republic.
(Note
we have used both the words 'direct' as does the CAC in
Ansac
and
'immediate' as is used in the EU. While there is some overlap in the
language, there are some cases in which the facts fit the
one concept
better than the other. We explain this more fully below when we
consider the pleadings in this case). We will refer
to this
formulation from now on as the 'qualified effects' test.
Does
the referral make the necessary allegation to meet the qualified
effects test?
[101]
The complaint referral makes general allegations that the conduct
complained of has an anticompetitive effect. However, the
complaint
does not distinguish between the effects created by the three
incola
or local respondents and the
peregrini.
[102]
Whilst the issue of the broad characterisation of the Commission's
allegations as either (i) individual instances of collusion
or {ii) a
single overarching conspiracy will be dealt with in greater detail
below, we pause to mention here that it would be immeasurably

difficult for the Commission to plead, to a sufficient standard of
particularity to meet the heightened scrutiny of qualified effects

test, that individual instances of collusion (as opposed to a single
overarching conspiracy) sufficed .
[103]
We address the remainder of the Commission's allegations with regard
to jurisdiction below.
[104]
At paragraph 42 of the December affidavit, the Commission alleges
that:
"the respondents' traders'
participation (both active and passive) in the on-going unlawful
arrangement and/ or concerted practice
effected, or could reasonably
be expected to affect the value of the South African rand generally
and vis a vis the US Dollar."
[105]
The Commission does not however allege, to a sufficient degree of
particularity what the effect on the rand was, and whether
the
alleged conduct of the local
peregrini
was sufficiently linked
to this effect.
[106]
In its earlier February
referral, the Commission, in describing the conduct, repeatedly
indicated that the behaviour of the traders
was not conducted in 'the
normal course of trading'.
[38]
Whilst these facts may establish a violation of trading norms or
regulations, they do not establish any form of effect nor linkage

between the conduct of the traders and the effect in South Africa.
[107]
In the March affidavit, the Commission seems to take the most
direct approach of establishing jurisdiction. It lays out four
grounds
of jurisdiction generally. The first and second of which
addresses personal jurisdiction and will not be dealt with here.
[108]
The third, dealing with subject matter jurisdiction broadly
alleged that the conduct in the complaint referral affected customers

who used the ZAR. This broad allegation still does not establish what
the alleged affect was nor how the conduct of the traders
was linked
to the effect on the customers.
[109]
The fourth ground was as
unhelpful. The Commission alleged that the conduct involved
'the
use of the means of or instrumentalities of interstate commerce or of
the facilities of the Republic of South African national
securities
exchange in connection with the alleged transactions, acts, practices
and courses of business alleged in the complaint
referral
”
.
[39]
This too is unrevealing as to how the conduct of the traders was in
any way linked to an effect within the Republic.
[110]
It is thus necessary for the Commission to make additional averments
to sustain its case against the
peregrini.
(Here we mean the
local
peregrini
but should we be wrong on the case being
dismissed against the pure
peregrini
the same point would
apply to them as well).
[111]
Let us explain why. Assume that
two of the local
peregrini
through an offshore office
had traders who, in furtherance of an agreement to fix the
rand-dollar bid, offer spread at a moment
in time, thus making the
exchange more disadvantageous for some customers; i.e. in normal
competition parlance making the consumer
pay a higher price as a
result of the collusive agreement. If the effect was only on an
offshore customer or set of customers,
that agreement would not meet
the qualified effects test under the Act. But if as a result of the
same agreement between these
two firms, the bid-offer spread was, at
that moment in time, also able to effect the bid-offer spread for
South African consumers,
then the qualified effects test would be
met. The effect of course could also be indirect on the price (in the
language of section
4(1)(b)(i) both direct and indirect price fixing
is proscribed)
[40]
.
For instance, even if the bid-offer spread thereafter to the South
African consumer was not identical, but had nevertheless moved

upwards, pursuant to the offshore agreement, this would constitute an
immediate effect, on the EU formulation of the test, albeit
that the
price movement might be regarded as indirect. Whether it was
substantial would be a matter left to the trial to determine.
Conclusion
on jurisdiction
[112]
In conclusion on the jurisdiction issue we find that we have no
personal jurisdiction over the so-called pure
peregrini,
being
the following respondents: BAMLI (1); JP Morgan Chase (3); ANZ (5);
SNYS (6); Nomura (9); Macquarie (13); HBUS (19); MLPFS
(20); Credit
Suisse Securities (23). The case against these respondents is
dismissed with the exception of the declaratory order
contemplated in
paragraph 3.3.1. Second, in respect of the remaining local
peregrini,
additional allegations need to be made for the referral to meet
the qualified effects test. These allegations are dealt with in
paragraph 3.4.1 of our order. Finally, in respect of the local
peregriniwe
have required the Commission to confine the
administrative penalty sought to the limit imposed in terms of the
Act viz. turnover
within the Republic and exports from the Republic.
(See paragraph 3.3.2 of the order).
Part3
Further
Particulars
[113]
In this section we consider the exceptions which complain of the
deficiency of the Commission's complaint referral as supplemented.

Some respondents have classified this as a failure to make out a
cause of action; others that the pleading is vague and embarrassing.

For our purposes classifying the objections in this way is not
necessary. Rather the issues are; (i) is there a deficiency in
pleading; and (ii) if there is, might it be rectified by further
pleading; and (iiii) even if it might, should the Commission be
given
this opportunity, or (iv) should the case be dismissed.
[114]
The debate about the adequacy
of the pleadings largely took place at a high level of generality. As
many as there were cases the
respondents relied on emphasizing the
necessity for greater granularity in pleading, these were countered
by the Commission citing
authority that pleadings are not required to
equate to evidence. Neither approach was particularly helpful in
navigating the debate.
Some respondents suggested what particularity
would be required and this approach has been more helpful.
[41]
[115]
The central problem with the referral affidavits is not so much their
lack of detail, (although in some places it is) but
their lack of
focus and consistency as we go on to discuss. The second problem is
the Commission's reluctance to commit itself,
unequivocally, to a
particular formulation of its case. In choosing to keep all its
options open to avoid risk, the Commission's
case has suffered a lack
of focus. We go on to discuss these problems below and how we have
resolved them. We have done so under
several headings in which we
state what the issues are, analyse them, and then come to a
conclusion.
Issue
one- Has the Commission clearly identified which conspiracy it
alleges?
[116]
In the course of this litigation the Commission's case has undergone
several changes. The case was initiated on 1 April 2015.
This
initiation statement was then amended on 31 August 2016. The case was
referred in February 2017. But since that referral the
Commission has
filed three supplementary affidavits, the last and most significant
being what we have termed the 'December affidavit',
filed in December
2017.
[117]
This case involves a
contravention of section 4(1)(b)(i) and 4(1)(b)(ii) of the Act in
that the respondents are alleged to have
entered into an agreement or
concerted practice to rig the rand- dollar exchange rate and in so
doing directly or indirectly to
fix prices and secondly to effect a
market division on a temporal basis by allocating customers.
[42]
Here the allegation is that by pulling trades or withholding from
trading one trader left the market open for another and hence
at a
moment in time, agreed to allocate customers. For the time being we
will refer more loosely to the term conspiracy to embrace
both the
concepts of agreement and concerted practice although doctrinally in
terms of the case law they must be differentiated.
[43]
This we discuss later in the decision.
[118]
Three candidate conspiracies emerge from the papers because of the
manner of the pleading. It is sometimes difficult to discern
whether
they are posited in the alternative or exist in a complementary
sense.
[119]
The main conspiracy involves all the respondents in a single
overarching conspiracy. We will refer to this as the single
overarching conspiracy or 'SOC'. The second candidate conspiracy the
Commission refers to as a multilateral collusive arrangement.
What
the Commission refers to here are a series of conspiracies
differentiated on two bases. First, they are differentiated based
on
the type of mechanism agreed upon to rig the exchange rate. Each type
constitutes a different multilateral conspiracy. The second

distinction between this and the SOC is that the former involves only
some of the respondents, not all of them. However as there
are always
several respondents involved, it is termed multilateral. The third
candidate is a bilateral conspiracy. Like the multilateral
it is
confined to a specific type of agreement, but unlike it, it involves
a conspiracy between only two firms hence the name bilateral.
The
bilateral agreements can be broken down further into two categories.
They may involve repeated contacts between two firms or
single
instances. Here again the Commission employs distinguishing labels;
the former conduct is referred to as
"cumulative"
the latter as occurring in
' isolation'.
[44]
[120]
These distinctions are crucial because, as we explain later in the
legal section, this determines facts such as when the conspiracy
is
alleged to have started, when it ended, whether a firm is liable for
the actions of the other respondents, and if so, the extent.
[121]
We now examine why confusion has arisen around the three types.
How
the Commission's case changed
[122]
When the case was initiated in
April 2015, the Commission alleged that it had information that the
respondents had entered into
"...an
arrangement, agreement and or concerted practice" to
fix
prices in the foreign exchange market, in relation to rand-based
pairs. On an ordinary reading of the language, although the
statement
does not expressly use that term, this was an allegation of a single
overall conspiracy i.e. an SOC. Further it was alleged
to be
ongoing.
[45]
[123]
The April initiation statement
went on to allege that the respondents' traders had made use of the
Bloomberg instant messaging system
or chatroom to share information
used to manipulate the prices of foreign currencies.
[46]
It alleged that:
"They log into the·
messaging platform and communicate about how much should be charged
for
a
particular
spread of dollar/Rands.”
[47]
[124]
The Commission explained that the chatroom enabled traders to
communicate in near real time thus enabling the frequent, short
and
rapid exchange of information.
[125]
Here the chatroom and its
utility and the fact that it involved the exchange of
"confidential
or competitively sensitive information "to
effect
price collusion made it the centre piece of the case.
[48]
[126]
When the initiation document was amended in August 2016, market
division was added to the theory of harm. The Commission alleged
this
took the form of:
".. . a
temporal
sharing of customers in that for
a
limited period of time the
trader that is holding or pulling will have not have his offers or
bids available to customers to trade
with.
”
[49]
[127]
Although this amendment made no further mention of the chatroom, it
also did not state anything inconsistent with what was
contained in
the April statement. The two initiation statements were thus
consistent in alleging an SOC, the latter merely amplifying
the
former.
[128]
The complaint referral was
filed in February 2017. In the accompanying affidavit there is now an
explicit reference to what is described
as the respondents
"overarching agreement"
in one of the prefatory
paragraphs.
[50]
In a concluding paragraph the allegation is made at its most
explicit:
"The collusive conduct by the
respondents set out above constitutes a
single conspiracy
by the respondents
to fix prices and divide markets
through bilateral
and
multilateral
agreements
using among others, chatrooms, telephone
discussions and meetings."
[Our emphasis]
[129]
What the Commission is alleging here is that there is an SOC. But
that SOC is
implemented
through the mechanism of bilateral and
multilateral agreements and in chat rooms. But this is not a
self-evident proposition. The
link needs to be alleged but it is not.
[130]
Granted the February affidavit goes into some detail about the
multilateral agreements. It outlines five types of multilateral

agreements that are distinguished based on the type of conduct they
involve. They are; agreements to fix bids and offers prices
on the
trading platform; coordination of trading activities around the fix;
agreements to fix prices and offers quoted to customers;
agreements
to fix bid-offer spreads; agreements to coordinate trading.
[131]
Yet from the way the affidavit is structured the multilateral
agreements each appear as discrete self-standing conspiracies.
This
is because the Commission alleges which respondents were involved in
each respectively. Whilst all respondents are involved
in at least
one of these five, not all are involved in each one.
[132]
Yet all are implicated in the SOC. If by virtue of involvement in any
of the multilateral agreements a respondent is
ipso facto
linked
to the SOC this must be alleged. The Commission needs to explain how
the separate parts get glued to the whole.
[133]
Put differently a respondent reading the February affidavit might
understand the allegations against it being involved in
one or more
multilateral conspiracies, but not understand how this relates to
being involved in either the SOC or any bilateral
conspiracy. Indeed,
the February affidavit says nothing about what the bilateral
conspiracies are other than alleging their existence.
[134]
A further confusion created in the February affidavit is the
means
of communication. In paragraph 41 of the February affidavit, in what
is a prefatory description of the operation of the alleged
cartel,
the Commission states:
"Further, the respondents had
a
general understanding to divide the market by refraining
from trading, taking turns in transacting on
[the]
Reuters
platform
..."
[135]
The Reuters platform features again in the next paragraph.
"The
respondents used the Reuters trading platform
...
to fix
prices
... "
[136]
In other words, the Commission is alleging that the conspiracy is
carried out by using that platform but how it is used is
not
explained. In paragraph 43 of the February affidavit the Commission
goes on to allege that in addition to the platform described
above
(i.e. the Reuters platform) the respondents also carried out their
collusive activities using other bilateral and multilateral

interactions, including the Bloomberg chatroom.
[137]
When the Commission goes on to provide further elaboration on the
five types of collusive agreements it highlights their use
of the
Reuters platform. Granted each time it adds in,
inter alia,
their
use of the Bloomberg chatroom, but it comes in as one of many
mentioned extras, not as it was in the initiation statement,
and as
we shall see in the December affidavit, the sole instrument of
communication of the conspiracy.
[138]
To summarise; the February affidavit places emphasis on the manner of
the conduct and why it is collusive, rather than on
the means of
communication, which seems incidental. Further, although alleging the
existence of an SOC comprised of multilateral
and bilateral
agreements, it does not link the latter two to the former, which is a
necessary allegation.
[139]
The December affidavit would have provided the Commission with a
subsequent opportunity to resolve these issues. Instead it
has led to
a further mutation in the way the case has been presented.
[140]
The first part of the December affidavit seems to repeat what has
been alleged in the February affidavit. For instance, in
paragraph
40.1, all the platforms are listed, again in a neutral fashion,
suggesting no more than these were the means for traders
to
communicate. In addition to the three platforms mentioned, so are the
more conventional forms of communication; emails; the
phone and
personal communication. This paragraph on its own does not suggest
that there was anything collusive about the choice
of means of the
communications; rather it is the content of the message not the means
of communicating that matters. In this sense
up till this paragraph
in the affidavit, both the February and December affidavits are
consistent.
[141]
But from paragraph 40.2 of the December affidavit, the emphasis
shifts. Now it appears that the means of communication does
matter.
The Commission now focuses on what are described as instant messaging
platforms. These platforms it explains contain a
facility that allows
for the creation of permanent
ad hoc
chatrooms with selected
participants. One such instant messaging platform is the Bloomberg
one. Recall that in the February affidavit
the Bloomberg platform was
one of many forms of communication mentioned - indeed it did not
receive much attention; playing it
seemed second fiddle to the
Reuters platform.
[142]
But from paragraph 40.2 onwards, the Bloomberg chatroom moves from
the footlights of the February affidavit to the floodlights
of the
December affidavit and now appears to be the only means of
communication the Commission seeks to rely on. The case now turns
on
the centrality of the chatroom to the conspiracy. The mere fact of it
being utilized as the chosen form of communication is
relied on by
the Commission to infer a covert, discrete conspiracy. This notion,
even if not yet fully crystalized in the December
affidavit, will
become, as we go on to show, the basis of the Commission's case for
an SOC.
[143]
The first signs of this shift
emerge in this portion of the December affidavit (paragraph 47
onwards) where the Commission lists
in respect of each respondent,
one or more of what it terms are
"some
of the manifestations of the agreement, arrangement and concerted
practice and examples of its implementation."
[51]
Notably all the examples given occur in the Bloomberg chatroom. No
'manifestations' on any other platform, instant or otherwise,
are
alleged. This approach appears to suggest that notwithstanding the
February affidavit, the instances of implementation the
Commission
will rely occur exclusively on the Bloomberg chat room.
[144]
What the December affidavit does resolve, unlike the February
affidavit, is the link between the bilateral and multilateral

agreements and the SOC.
[145]
In paragraph 40.2.4 it explains that through the use of instant
messaging the respondents could engage in bilateral or multilateral

communications. We assume that this is the sense that the terms were
used earlier in February although in that affidavit it was
never
explained in this way.
[146]
But then the crucial link
between the three is made. The Commission alleges that messages on
the chatroom were visible to all participants
in the chatroom
"...regardless of
whether a participant chose to actively engage in the communication"
or were "passive".
[52]
It explains that
active
participants
- were those
directly participating in the chats and
passive
participants
were those who
while not participating in the conversation, could nevertheless view
the conversation. Importantly, the Commission
alleges that even
passive participation makes a respondent liable for the
communications of the others in the chatroom. This is
because passive
participants had access to all the information on the chat and it is
precisely because they were supine, they are
alleged to permit the
conduct of the active traders.
[53]
[147]
But even the December affidavit read as whole, whilst hinting at the
centrality of the Bloomberg chatroom, does not yet commit
itself to
it fully. Later this only becomes apparent in oral argument.
[148]
In oral argument Mr. Ngcukaitobi for the Commission, clarified that
the use of a particular platform was of no significance.
Rather it
was what the chatroom could be used for that was. As he put in
argument:
" ..
.hence
our suggestion at the beginning that Bloomberg as a facility is
benign, but the opening of the chatrooms with the specific
aspects
described in paragraph 41.2 and the invitations, even
[is
an]
invitation to
a
conspiracy and the
acceptance of that invitation, is an acceptance to join the
conspiracy because it is these chatrooms that were
used by the
traders to facilitate, perform and undertake activities that are in
violation of section 4(1)(b)."
[54]
[149]
This statement is the clearest
exposition of the Commission's case linking respondents to the SOC.
It is not made out this clearly
in either of the affidavits, even
with the most sympathetic reading of paragraph 40 of the December
affidavit. As Mr. Ngcukaitobi
explains, the SOC comes about because
respondents are invited to join the platform and accept the
invitation. It is the electronic
equivalent of the proverbial
smoke-filled room of cartel folk lore.
[55]
[150]
Less clear even in oral argument was whether the chatroom existed
solely to further the conspiracy. If it was, one can understand
the
Commission's argument. If not, why does the Commission attach so much
emphasis to the offer and acceptance to be a member of
the chatroom.
If the chatroom existed for both benign and malign purposes why does
acceptance of an offer constitute membership
for the malign purpose?
The respondents are entitled to know this. Furthermore, was this
chatroom specific to the rand-dollar trades?
Later in the December
affidavit the Commission seeks to rely on the existence of another
chatroom that concerned the Euro-dollar
pair. Is there some
relationship between the two? Did different chatrooms exist for
different currencies - were the modalities
the same, only the
currency pairs different? Did different traders who operated in the
platform in this case operate in other platforms
to achieve the same
ends in respect of other currency trades?
[151]
It is also not clear whether the Commission is alleging the existence
of an express agreement that underpins the SOC or whether
it seeks to
infer its existence from the surrounding facts.
[152]
It seems from what Mr. Ngcukaitobi argued that this is a case of
inference. For instance, in argument he asks the following
rhetorical
question:
"Reasonably speaking what did
they think they were doing when they logged in? When they told others
to withhold their positions?
When they told them to put their fixes
and bids? When they told them to put fake bids? What did they think
they were doing?'
[56]
[153]
The respondents are entitled to
know if this is based on inference or an express agreement. If it is
a case based on inference,
then they are entitled to know what facts
the Commission relies on to draw the inference.
[57]
[154]
The reason the referrals have led to confusion is the Commission's
failure to distinguish between the agreement that underpins
the case
(the SOC) and the acts of consensus that constitute the
implementation of that agreement. Because the term 'agreement'
has
been applied to both, in a loose fashion, this distinction is lost.
As we explain in the section below this distinction matters
for the
legal consequences that flow. It is now clearer to us from the oral
argument that the Commission has returned to its original
case of the
existence of an SOC made out in the April initiation.
[155]
As we now understand the Commission case, after oral argument, there
is only one agreement or arrangement or concerted practice
that
underpins its case - that is the SOC.
[156]
The SOC is an agreement in
general terms to fix the price of the rand dollar exchange rate and
to divide the market on a temporal
basis. Because it is too general
an agreement to be practically implemented, it requires furthermore
specific consensus between
the participants to the overall SOC to do
so. This is where the two other species of agreement fit in - the
multilateral and bilateral
agreements. The latter are not the
agreements to conspire, but the mechanism by which to
implement
the conspiracy. They have
done this in two ways: consensus on (i) the modes of implementation
(the five kinds set out in the February
referral in paragraph 45.1 to
45.5.) and (ii) the medium of communication of the implementation
(use of the Bloomberg chatroom).
But if that is what the Commission
means it must state this clearly.
[58]
[157]
But there also appears to be a further distinction between the SOC
and the multilateral acts of implementation. The SOC appears
to be a
continuous agreement. The Commission alleges that it is "ongoing."
By contrast the multilateral and bilateral
agreements, if they are
the acts of implementation, as itemised by the 85 manifestations set
out in the December affidavit, are
of a temporary nature; specific to
certain acts and those actors alleged to have performed them. They
are thus temporary in nature.
[158]
But because these acts of implementation involve repeated patterns
between different sub-groups of respondents, played out
over time and
in the same forum
{the
chatroom}, the Commission seeks to allege that what appear to be
actions temporary in nature, in regard to implementation,
are also,
taken cumulatively, evidence of an ongoing overarching conspiracy,
the SOC.
[159]
But most importantly and this, in fairness to the Commission, is made
out clearly in the December affidavit, is the idea that
passive
participation in a chatroom is enough to make a firm liable for the
acts of implementation of all the rest and thus links
individual acts
of participation to the overall conspiracy. The chatroom is akin to a
virtual boardroom, once you have been let
in, remaining silent is no
excuse.
Has
the Commission made this case out
in
the affidavits already?
[160]
The Commission may be correct to contend that every element of this
case we have described above, can be found somewhere between
the
covers of its various referral affidavits, if read with sufficient
care. The problem is that there is much else in between
the covers to
create confusion for even a diligent respondent. We take as one
example the case Standard Bank has to meet. We have
chosen Standard
Bank because the case against it is factually the simplest.
[161]
Recall that it is in the December affidavit that the Commission, for
the first time, lists the manifestations of conduct that
each
respondent respectively was involved in on the Bloomberg chatroom. In
the case of Standard Bank, unlike some of the other
respondents, this
is limited to one alleged manifestation.
[162]
The manifestation is alleged to
have taken place on 1 October 2012 and involves what is described as
a communication between Peter
Taylor of Barclays and Bryan Brownrigg
of Standard Bank, in which they are alleged to have discussed a
bid-offer spread in contravention
of section 4(1)(b)(i)
[59]
i.e. price fixing.
[163]
The Commission goes on to state that this communication
"...was
a
manifestation of the broader agreement, arrangement and or
collusive practice between respondents' traders
... " Put
more simply the Commission is saying 'this is one instance of you,
Standard Bank, being involved in the larger SOC.'
It is saying we are
giving you one example of a bid-offer price fix, but you are part of
the conspiracy for everything - not just
for this conduct but all the
rest suggested in the two affidavits. We call this the primary
December allegation.
[164]
But if Standard Bank just read the February affidavit in isolation,
it would understand the case against it differently. The
specific
allegation made against it was that it was involved in agreements to
fix bid-offer spreads. While this allegation is at
least consistent
with that made out in December in terms of the species of conduct
involved, there is no suggestion of its frequency.
Indeed, the
impression created by the manner of pleading in the February
affidavit was that this conduct was ongoing and frequent.
The
Commission here alleges that this conduct i.e. fixing bid-offer
spreads, occurred "...
from at least 2007..."
From
this expansive language Standard Bank would have reasonably
understood that it was an active party during this period in respect

of this conduct - not that its conduct was limited to one instance as
alleged in December - confined to one communication between
Taylor
and Brownrigg.
[165]
Furthermore, still reading the
February affidavit, its conduct is described as involving only those
respondents named as involved
in this species of conduct. That list
is more limited than all the respondents then alleged to be part of
the SOC.
[60]
A reasonable reading of the February affidavit would be that Standard
Bank is liable only for this type of conduct in a conspiracy
only
with those other named respondents - not all the respondents cited in
the case. Granted paragraph 48 of the February affidavit
seeks to
pull all respondents back into the SOC, but, as explained earlier,
there is nothing in the February affidavit to explain
why this should
be the case.
[166]
The February affidavit is thus narrower in terms of scope of conduct
and co­ conspirators than the primary December formulation.
But
to add to the confusion the December affidavit also rests the
Commission's case against Standard Bank on an alternative
formulation.
The alternative formulation is that the conduct i.e. the
Brownrigg/ Taylor communication:
"...in isolation and
cumulatively constitutes
a
breach of 4(1)(b)(i)
of
the
Act."
[167]
We understand this formulation to mean that even if there was only
proof of one communication with one competitor, with Taylor
of
Barclays, Standard Bank is liable for price fixing, for this act
alone. Put differently, it means that even if the main case
of the
SOC fails against Standard Bank it would still be liable for this
single instance.
[168]
The use of the term cumulatively with regard to Standard Bank, maybe
a drafting error. It is used repetitively in respect
of all the
respondents, most of whom are alleged to have been involved in more
than one manifestation. This is how we understand
the term
cumulatively to mean as used in the alternative formulation. It is
the cumulation of all the instances cited in respect
of that
particular respondent. Since Standard Bank faces only one
manifestation there can be no cumulation of the conduct. Nor
could
'cumulation' refer to of all the conduct by all respondents, since
that is the subject of the SOC (paragraph 135.1) and would
make the
term cumulative redundant.
[169]
What the exercise in analysis of the case in respect of Standard Bank
shows is the dissonance between the different allegations
in the
February and December affidavit, the latter also in respect of its
alternative formulations.
[170]
We can appreciate that in cases of SOC's, the Commission, relying on
a case of inference to prove the SOC, may in the alternative
want to
rely on a more modest theory, involving isolated acts as constituting
on their own contraventions of section 4(1)(b). In
this case however
the theory advanced now by the Commission is so dependent on the
chatroom and on the notion of active and passive
participants, that
pleading in the alternative a case that a firm would be otherwise
liable for individual instances of conspiracies
is so at variance
with its main theory of harm that it almost contradicts it. But this
is not the only problem. It also places
an intolerable burden on the
resources of the respondents in conducting their defence.
[171]
If the respondents are in for all the manifestations of the theory,
be they active or passive participants, they are entitled,

particularly at a stage in the proceedings when the Commission has
had a chance to reformulate its case, to know which one they
face. Is
Standard Bank faced with the prospect of responding to 85 instances
or just one? Fairness requires the Commission to stick
with the
theory its counsel has advanced in oral argument and to clarify that
this is where its case rests.
[172]
For this reason, we have taken the unusual approach to require the
Commission to confine itself to the case of an SOC as described
by
its counsel in oral argument, and to drop the allegations of single
isolated or cumulative isolated instances.
[173]
This is not to hold that in
general the Commission cannot make out a case in the alternative.
Indeed, ordinarily we would avoid
making directions that constrain
the Commission's prosecutorial discretion to formulate its charges in
the manner it considers
best. But we also have a duty to ensure that
Tribunal proceedings are fair.
[61]
When the formulation of a case in the alternative, makes the case
confusing for respondents, as we have found it does, and when
after
being given an opportunity to re-formulate the case, the Commission's
efforts have still not added further clarity, then
fairness requires
that we should intervene.
[174]
We have not done so arbitrarily. We have also not chosen for the
Commission. The order in question does no more than to confine
the
Commission to the very case its counsel in final argument advanced.
[175]
Some counsel had argued that we should call time out on the
Commission's opportunities to reformulate its case. We think that

goes too far and given that the Commission acts not in its own right
but as the guardian of the public interest, the balance between
the
interests of the remaining respondents and the public interest is
better served by requiring the Commission to prune its case,
rather
than dispose of it.
[176]
We turn now to why it matters legally whether the Commission relies
on an SOC or a lesser form of agreement.
Legal
consequences of the type of agreement pleaded
[177]
The distinction between an SOC and a single or cumulative set of
agreements has important implications for the case the respondents

are required to meet.
[178]
First, in a single overall agreement each respondent is responsible
for the actions of the others. It follows from this that
each
respondent needs to know not only the case against it for its actions
but that against all the others as well. When did it
start, when did
it end, if it indeed has ended, and, while not every detail, some
indication of its scope?
[179]
Secondly the respondents in
this type of case need this information not only for understanding
the case they have to plead to on
the merits, but also the issue of
remedies. For instance if administrative penalties are to be imposed
-the relief the Commission
seeks against all the respondents -
amongst the factors the Act obliges the Tribunal to take into account
in respect of a prohibited
practice are its
duration,
gravity and extent.
[62]
It may also in respect of duration be relevant for possible follow on
civil liability.
[63]
Thirdly, it is relevant to the issue of prescription or limitation of
action as we discuss below. A case based on single instance
of
conspiracy may not have been brought in time because an individual
respondent's actions may have ended three years prior to
the
initiation of the complaint. However, if the case is based on an
overall conspiracy, where, as in this case, passivity and
not just
activity leads to liability, the later actions of other respondents
may mean that the prohibited practice still subsisted
at the date of
initiation and accordingly the case against that respondent has not
prescribed.
[64]
[180]
Here case Jaw emanating from the European Courts is of great
assistance because courts there have had to grapple with what

distinguishes an overall conspiracy from isolated acts of conspiracy.
In
Team Relocations,
the General Court held that three
conditions must be met to establish participation in what it termed a
single and continuous infringement
or what we in these reasons have
called an SOC. These, the court held are:
"...
the
existence of an overall plan pursuing
a
common
objective, the
intentional contribution of the undertaking
[firm]
to that plan, and its
awareness (proved or presumed) of the offending conduct of the other
participants.”
[65]
[181]
In other decisions these
criteria have received further elucidation. For instance, the
European Court of Justice has held that the
fact that a cartel
existed over distinct products and geographic markets, did not
preclude the existence of a single infringement.
Nor does the second
criteria of an intentional contribution, require that the firm had
participated from the start of the conspiracy
or pursued the plan in
the same way as other members. Nor does the fact that some members
may have had reservations or indeed cheated
make a difference.
[66]
As far as the third criteria awareness of the conduct of the others
is concerned, here the courts have been stricter. The General
Court
has held that the firm must be aware of the general scope and the
essential characteristics of the cartel as a whole.
[67]
[182]
Less clear in European law is whether a regulator in prosecuting a
cartel must allege that an SOC exists as an objective fact
or whether
in the face of murky evidence where the distinction is not clear cut
this is a choice of prosecutorial discretion. For
instance in a
thoughtful passage on the subject by former EC Advocate General Wahl,
he stated:
“
ln the case law
of
the
court, the concept
of
single and continuous infringement has
been employed, in particular, in the context of art.101 TFEU to
capture several elements
of anti-competitive conduct under the
umbrella of one single and continuous infringement for the purposes
of
enforcement. In that regard, the underlying rationale is to
ensure effective enforcement in cases where infringements are
composed
of
a
complex of anti-competitive practices that can
take different forms and even evolve over time.
In other words, the aim is to avoid
the unfortunate enforcement outcome where various agreements and
concerted practices under art.101
TFEU, which in reality form part of
an overall plan to restrict competition, are treated separately. For
that reason, recourse
to the concept of single and continuous
infringement tempers the burden of proof generally weighing on
enforcement authorities
regarding the need to prove the continuous
nature of the anti­ competitive practices scrutinised. More
particularly, where
a
complex of agreements and practices have
been implemented over a long period of time, it is not unusual that
changes in the scope,
form and participants to those agreements
and/or practices have taken place during the relevant time period.
Without the assistance
of the concept
of
single and continuous
infringement, the Commission would have to meet
a
higher
evidentiary threshold. It would need to identify and prove the
existence of several distinct anti-competitive agreements
and/or
concerted practices as well as identify the parties involved in each
of them separately. Treating the impugned practices
separately could
also in some cases result in a time-bar of older agreements and/or
concerted practices. That would make enforcement
less efficient.
The concept of single and
continuous infringement thus constitutes
a
procedural rule.
”
[68]
[183]
In the present case we do not have to decide this point. We
understand the Commission to be alleging the SOC through the
centrality of the chatroom as an objective fact. It just has to be
bold enough not to hedge its bets.
Conclusion
[184]
We return to the question of whether the Commission's case has
changed. Undoubtedly, as we have shown above, it has. No reader
of
the February referral would have understood the case in the way it
has been presented now. But it is no answer for the Commission
to
contend that the December affidavit has supplemented the February
affidavit.
[185]
The Commission has not replaced the February affidavit with the
December one. This means one is required to read both together.
This
might be acceptable if the later affidavit provided more meat to the
bones of the first. But the December affidavit is not
drafted in this
manner. Aside from omitting the citations of the respondents already
joined and the background to the industry
which are only s.et out in
the February affidavit, the December affidavit is drafted as if it
were a replacement of the February
affidavit, as it sets out the
entire case
de novo.
The two formulations are so dissonant
that the criticism that the case becomes impossible to comprehend if
one has to plead to both
is well made. For this reason when the
Commission furnishes the particularity required we have directed it
to file a completely
new affidavit, that substitutes and replaces the
two others, so that the respondents are faced with only one pleading
to answer.
[186]
Furthermore, if the Commission clarifies its referral in the manner
suggested in its oral argument, with the addition of the
particulars
we require in these reasons, this will resolve most of the exceptions
that relate both to no cause of action or vague
and embarrassing.
There will now be a coherent case of what the conspiracy was, how it
was entered into, and how it ended; it if
it indeed has. It will also
explain why the relationship between the firms is one of competitors
as distinct from one between buyer
and seller. In the order we have
indicated the minimum features that this supplementary affidavit
needs to have.
Limitation
on bringing action
[187]
Several respondents have raised the possibility that the case against
them may no longer be actionable against them, because
of the
provisions of section 67(1) of the Act which states as follows:
"A
complaint in respect
of
a prohibited practice may not be initiated more than three years
after the practice has ceased."
[188]
Note that section 67(1) sets up a measuring tape that goes
backward in time. One first determines the date the complaint was
initiated
on and then measures back in time. If the conduct in
question has ceased more than three years prior to the date of
initiation,
then the complaint may not be initiated.
[189]
For convenience we refer
to this provision as the
prescription
provision.
[69]
[190]
We are not able to decide the prescription arguments now. This is
because two issues relevant for the application of section
67(1) are
presently unclear. They are the date of the initiation and the date
when the conduct ceased. The date of initiation is
unclear because it
raises both factual and legal issues that need to be determined. We
explain these issues in greater detail later
in the section on
joinder in a postscript.
[70]
[191]
Depending what date is selected for the date of initiation this may
have different implications for different respondents.
If the date of
the first complaint initiation (i.e. April 2015) is held to be the
date of initiation for all the respondents regardless
whether they
have been named, because this is an SOC, then this might not matter.
But if the date of initiation is the date when
the respondent is
named and indeed named correctly, then some respondents are named
only in the August 2016 amended initiation
and some, those five
sought to be joined, only in the December 2017 affidavit. A gap of
more than two and half years separates
the naming of the early
initiates from the last sought to be joined. It is conceivable that
for some prescription may have run
its course during this
interregnum, depending on the answer to the crucial dates.
[192]
The date the conduct ended is unclear as well.
[71]
As this is the most important fact of all, depending on when it is,
it may render all the uncertainty around the date of the initiation

moot.
[193]
Of course, if as the Commission alleges in the December affidavit,
all respondents were part of the SOC and that the conduct
persists,
then the complaint would still have been timeously initiated against
all, even those deemed to have only had the complaint
initiated
against them by virtue of tacit initiation in the December affidavit.
[194]
This raises the second question
in the prescription debate. Whether it is sufficient for the
Commission to allege, as it has done,
that the conduct still
persists.
[72]
This is what the Commission argues; once it has alleged the conduct
is ongoing the onus shifts to the respondents to plead the
date when
it ended if they seek to refute this. This, for the Commission, is an
issue then of fact for the trial to resolve and
should not be
determined by way of exception.
[195]
The Commission relies for this on our decision in
Pioneer
where
we held that:
"Section 67(1) is silent on
the issue of onus. However the position in South African law is
abundantly clear. A court shall
not of its own motion take notice
of
prescription. In other words
if
a
party
wishes to rely on prescription then it is required to raise it
as
a
special plea. Moreover it
is for
a
party
invoking prescription to allege and prove the date of inception
of
the period of prescription.
Hence, Pioneer, if it wishes to rely on the provisions of section
67(1) is required to allege and prove,
on a balance of probabilities
that the conduct complained of by the Commission in its complaint
referral
of
2007
ceased three years before this date. Such an approach to section
67(1) is entirely appropriate in the context of the secretive
nature
of cartel activity, where respondents engage in meetings held behind
closed doors, at restaurants, pubs and hotels, keeping
virtually no
paper trail and where proof of these arrangements lie squarely and
solely within the knowledge
of
co­ conspirators.
"
[73]
[196]
In
Pickfords
we took the position further when we held that at
the end of the day the question of where the onus lay was one of
fairness.
"The Constitutional Court has
made it clear that in civil matters there is
'..
nothing rigid or unchanging
in relation to the question of the incidence of the onus of proof in
civil matters, no established golden
thread like the presumption of
innocence that runs through criminal trials. As Davis AJA, quoting
Wigmore, put it:
...
all
rules dealing with the subject of the burden of proof rest 'for their
ultimate basis upon broad and undefined reasons of experience
and
fairness.
'
The
approach to who bears an evidential onus in the Tribunal case should
follow this approach. We should avoid rigidity in determining
who
bears an onus and rely on experience and fairness.
"
[74]
[Footnotes omitted]
[197]
Thus in the present case on a fairness standard is it sufficient for
the Commission to allege that the conduct is ongoing?
We would
suggest not for two reasons.
[198]
First, since this case concerns an SOC which has, at its heart,
interactions on the Bloomberg chatroom. The Commission alleges
that
even passive members of the chatroom are liable for the actions of
those who are active. This means a member of the chatroom
who has
been passive may well not know when the last interaction on the
chatroom took place or even if it took place. Nor indeed
might a
respondent which may have remained a member but did not log in. It
would be unfair for the burden to shift to those firms
which might
have knowledge of their own conduct but cannot be assumed tohave
knowledge ofconduct of other firms whose manifestations
might pull
them into the SOC on a later date than they could reasonably be aware
of.
[199]
Secondly, there is reason to be sceptical about the Commission's
ongoing conduct claim. Although the December affidavit was
filed in
2017, and sets out 85 manifestations, the last relied on occurs in
November 2013. One might reasonably expect if the conduct
had
continued beyond that date, the Commission would have listed at least
some manifestations to demonstrate this, knowing that
prescription
had already been raised by some of the respondents in response to the
February affidavit.
[200]
Moreover, from the referral it
appears that time between the "manifestation" and the
payment may be brief. In the February
affidavit the Commission
suggests that the gap between conducting a transaction and settlement
is no more than two days, unless
it is a forward transaction. But
even a forward transaction is it appears settled
"...at
least after two days".
[75]
If each collusive transaction is concluded by the act of payment,
then the conduct in this case may have ceased within a few days
after
the date of the last manifestation. This suggests that unless the
Commission has more information available to it the conduct
may have
ceased by late November or December 2013.
[201]
In these circumstances we consider that fairness dictates that the
Commission should either plead the last date of the manifestation
it
relies on or otherwise set out what facts it relies on for the
allegation that the conduct still is ongoing.
Wrong
trader or no longer trader
[202]
Certain of the respondents were represented by traders who were
employed by them (such as Investec), whilst others had a looser
form
of association with them. We know from the referral that certain
traders allegedly represented more than one bank whilst others

represented several at different times.
[203]
Several of the respondents make the point that the trader who is
alleged to have acted on their behalf no longer acted for
them at the
time of the alleged attributed instances or acted for them at a time
when the particular instance alleged must have
predated the referral.
[204]
Thus one Jason Katz appears to have acted for a number of different
respondents at different times.
[76]
Another trader, Christopher Hatton, is alleged in one paragraph of
the February affidavit to have represented HBEU (14), but in
the same
paragraph he is also said to have represented Credit Suisse (11).
[77]
In its exception HBEU (14) alleges that these allegations are
contradictory as Hatton could not have acted for both at the same

time.
[78]
This of course is a question of fact. It is not self-evident that he
could not have acted for both and so this is a matter best
decided at
trial. Nor is it possible to determine, as HBUS (19) requires us to
find in the case of Hatton, that the conduct was
time barred because
Hatton's actions were last alleged to have taken place more than
three years prior to the earliest possible
date of initiation.
[79]
This as we explained earlier in relation to prescription is not an
issue we can decide now.
[205]
This does not mean that the respondents are not entitled to some more
particulars on the relationship that existed between
the banks and
their traders. The chatroom has now become the centerpiece of the
conspiracy through the communications of traders.
As we understand
the Commission's case, it is the activities of the trader that link
the bank that employed or retained them to
the conspiracy. The
Commission also alleges that even passive membership of the chatroom
at the relevant time constitutes participation
in the conspiracy.
Thus, it is reasonable, if the Commission alleges that the same
trader at the same time acted for more than
one respondent, to either
clarify this issue or correct it. What links the trades of a trader,
who at the same time is acting for
more than one principal, to the
trades of a particular bank? Second, where a trader ceased to be
retained or employed by a bank
during the conspiracy, the Commission
should indicate on what basis the bank remains liable beyond that
date.
[206]
Beyond requiring this clarity, it is premature to determine whether
allegations made out concerning specific traders are contradictory
or
inconsistent.
Exceptions
dismissed
[207]
We can at this stage dismiss certain of the exceptions raised.
[208]
Some respondents alleged that they could not be competitors
because they were not authorized to trade in rands in terms of the
Exchange
Control legislation ('Excon'). They are correct that the
referral is silent on this issue. However, this was not a necessary
allegation
for the Commission to have to make. If the particular
respondents were trading rands in the chatroom, with some or more of
the
other respondents, then the fact that they may not have been
authorized to trade in terms of Excon, is not a defence to collusion

in competition law.
[209]
If, however, this defence is raised because it makes trading
impossible for the bank or less likely, then this can be raised as a

defence on the facts. The failure of the Commission to deal with this
in the referral does not make the referral excipiable as
a matter of
law.
[210]
Next, several respondents argue that the Commission has failed to set
out the respective facts on which it alleges that the
conduct also
constituted a concerted practice. The respondents who argued this
point relied on dictum in the
Netstar
case where the
Competition Appeal Court held as follows:
"No doubt in many cases the
same evidence may be relied upon as pointing towards either an
agreement or
a
concerted
practice. However, sight should not be lost of the fact that they are
different. The definition of an agreement extends
the concept beyond
a contractual arrangement. However, what it requires is still
a
form of arrangement that the
parties regard as binding upon both themselves and the other parties
to the agreement. Absent such
an arrangement there is no agreement
even in the more extended sense embodied in the definition. By
contrast
a
concerted
practice examines the conduct of the parties to determine whether it
is co-ordinated conduct or they are acting in concert.
”
[80]
[211]
In a subsequent case,
Omnico,
[81]
decided after
Netstar,
a
similar point was argued at exception stage. We held there that there
would be sufficient compliance with the
Netstar
ruling:
The Commission appears to rely on
both. Case Jaw suggests that if
a
concerted practice is relied
on it needs to be specifically pleaded. For instance, parties may
commence with an agreement but later
follow on conduct may constitute
a concerted practice. Sometimes the difference may be theoretical and
the distinction elides.
Nevertheless, due to the case law this
difficulty must at least be grappled with by the pleader when seeking
to allege both
as
the
Commission has in the present referral. It is unclear if the conduct
that is relied on for the concerted practice is the same
as that for
the agreement or something different or additional thereto. This
requires further particularity and we address this
in paragraph 2.5
of our order. If the allegation of
a
concerted practice relies on
facts that differ from those relied on for the agreement these should
be set out.
[82]
[212]
We will follow the same approach in this matter and
accordingly have directed the Commission to indicate whether it
relies on the
same facts to make this conclusion as it does for the
agreement, and if not, and it relies on other facts, to set these
out.
[213]
It is worth noting that
in in European law not much is made of the distinction between an
agreement and a concerted practice. For
instance, the then Advocate
General Reischl stated in an opinion:
"there
is little point in defining the exact point at which an agreement
ends and concerted practice begins."
[83]
Whish says legally nothing turns on the distinction between the two;
the important distinction is between collusive and non-collusive

behavior. He points out that the European Commission has alleged in
cases that even if the contacts between competitors do not
amount to
an agreement they can still be characterised as a concerted
practice.
[84]
This is the approach the South African Commission has adopted in this
case.
[214]
It is certainly legitimate for the Commission to allege that the same
facts might give rise to either conclusion of law. Certainly,
there
is not a great deal of daylight between the expansive conception of
an agreement as defined in the Act, which ranges in the
continuum of
consensus, from a contract to an "...
understanding'
and
the definition of a
concerted practice
which is defined as:
"co-operative or coordinated
conduct between firms, achieved through direct
or
indirect contact., that
replaces their independent action, but which does not amount
to
an agreement."
[85]
[215]
However, if the Commission is not relying on the same facts for both,
the respondents are entitled to be alerted to this.
Strike
out
[216]
The Commission has attached three plea agreements, concluded in a
District Court in the United States, as annexures to the
December
affidavit. In the plea agreements the three banks (JP Morgan Chase &
Co, Barclays Pie, and Citicorp) pleaded guilty
to contravening
section 1 of the Sherman Act (the United States equivalent of our
section 4(1)(b)). In the agreements the banks
plead guilty to fixing
the Euro-dollar exchange rate, using inter alia, the mechanism of a
chatroom.
[217]
Much of the affidavit on this aspect contains selected quotations
from the plea agreements. The Commission alleges that the
"...
collusive practices
[
in this case}
were not
limited to trades in the USD/ ZAR pairing.
[86]
It goes on to allege that "
in
recent years, wide-spread collusive practices by traders on the FX
Spot market have come to light."
[218]
What the Commission is implying is that if this practice was
happening with the USO and Euro pair, through the medium of
chatrooms,
and the banks have admitted to this in the United States,
is it not likely that this has happened here?
[219]
This is what is known as similar fact evidence. This type of
evidence can be highly prejudicial simply because what appear to be

similar facts are not.
[220]
The third and fourth respondents (collectively the JP Morgan
respondents) argue precisely this point.
[221]
They say that neither
the currency pair nor the individuals concerned in the US case, are
the same as in the present case. Accordingly,
they argue, there is no
basis to introduce this as similar fact evidence. Instead it is
vexatious, irrelevant and prejudicial.
They seek an order to have all
these paragraphs in the December referral struck out.
[87]
[222]
The Commission did not do much to counter this in their heads
of argument. However, in oral argument Mr. Ngcukaitobi turned the
tables on the JP Morgan respondents, accusing them of bringing a
vexatious striking out application.
[223]
He argued that there were several reasons why the conduct was
the same. The usage of the instant messaging platforms, the same
trading
strategies. But he argued that the inclusion of these
paragraphs in the referral went beyond a reliance on similar fact
evidence.
He argued that the plea agreements were not limited to the
euro/dollar currency pair. The settlement agreement contains the
following
admission:
"In addition to its
participation in the conspiracy
to
fix,
...
the EUR/USO
currency pair exchanged in the FX Spot Market, the defendant through
its currency traders and sales staff, also engaged
in other
currency trading
and sales practices in conducting FX Spot
Market transactions with customers via telephone email, and/ or
electronic chat
... "[Our emphasis]
[224]
Mr. Ngcukaitobi said the Commission wanted to be able to cross
examine the JP Morgan witnesses on what the other currencies were

that it had admitted to in the US plea agreement.
[225]
There is no provision in the Tribunal rules for striking out
applications. Nevertheless, in terms of Rule 55 regard may be had to

the High Court rules. Striking out applications have been granted in
the past by the Tribunal but are upheld infrequently as these

applications are more often tactical and are inimical to the less
formal and more expeditious culture of the Tribunal's approach
to
pleadings. Nevertheless, there are cases where allegations are highly
prejudicial to respondents who should still be entitled
to the use of
this procedure.
[226]
In the present case
reliance on a settlement agreement with one of the respondents in
another jurisdiction is, at this stage of
the proceedings,
prejudicial to the third and fourth respondents and indeed to other
respondents in this case given that they are
alleged to be part of
the same conspiracy.
[88]
[227]
While the fact of the plea agreement is not confined to the
euro/dollar pair and refers to "other currencies" is
correct,
these other currencies are not named. Until further evidence
is introduced in this case, the connection between the settlement
agreement and the present pleadings remains tenuous.
[228]
We accordingly strike out paragraphs 145 to 152 of the
December affidavit.
Joinder
[229]
The Commission seeks an order joining the 19
th
to 23
rd
respondents. It is common cause that none of these respondents were
respondents in the original February referral. The Commission
accepts
that to join these respondents in the current matter it must apply to
join them in terms of Rule 45 of the Tribunal rules.
[230]
Each of the firms the Commission seeks to join, belongs to the same
corporate family and has a similar name to an existing
respondent
already cited in the February referral. From when the first
exceptions were brought to the February affidavit, it became
apparent
that certain respondents would be taking the point that the
Commission had
"got the wrong guy."
Since in the
market place some of these firms are simply referred to by a common
brand name, it may well be correct that there is
confusion as to
which entity in a corporate group was the one the particular trader
represented in the chatroom. The Commission
for this reason seeks to
ensure that at least the "right guy" is joined as a
respondent. Nevertheless, it has not elected
to drop the case against
the others in the group.
[231]
Four out of the five respondents the Commission seeks to join, have
opposed the joinder. One, Investec Bank Limited (22),
does not oppose
the joinder. We have therefore made an order to join them. (See
paragraph 4.1 of the order).
[232]
Mr. Cockrell, who argued the joinder issue on behalf of the other
four respondents, said in order for the Tribunal to order
joinder we
have to be satisfied on four issues: (i) whether we have jurisdiction
over the respondent; (ii) whether the complaint
has been properly
initiated against the respondent; (iii) that the complaint has not
prescribed; and (iv) whether prima facie a
cause of action has been
made out.
[233]
Of these four, one SANA (21), is a local
peregrinus,
as it has
a representative office in South Africa. (BANA (21) is the parent
corporation of BAMLI (1)).
[234]
The remaining three HBUS (19), MLPFS (20) and Credit Suisse
Securities (23) are pure
peregrini.
[235]
Of Mr. Cockrell's four issues, items (ii), (iii) and (iv) cannot be
determined now until we have received the Commission's
response by
way of the further particulars ordered. For this reason, we have
taken the decision to defer the question of joinder
pending the
submission of the further particulars we have ordered. (See paragraph
4.2 of the order).
[236]
We can however rule on the issue of jurisdiction, since this is a
matter we have already decided in relation to the other
respondents
already joined. Insofar as the four respondents may otherwise be
competently joined (i.e. in relation to items (ii),
(iii)and (iv))
then the relief granted has to be consistent with the treatment of
the other
peregrini
respondents.
[237]
The nature of the relief granted in respect of BANA (21), is not
subject to any limitation save for the extent of any administrative

penalty as it is a local
peregrinus.
(See paragraph 3.3.2 of
our order). The relief granted in respect of the other three viz.
HBUS (19), MLPFS (20) and Credit Suisse
Securities (23) is limited to
only the relief provided for in paragraph 3.3.1 of our order.
[238]
We leave open, as this issue
has not been argued, whether the 3.3.1 relief may still be granted
against these three respondents
if they cannot otherwise be
competently joined in respect of (ii) and (iii).
[89]
Postscript
on the initiation problem
[239]
Although we have deferred
deciding this point now, because until particulars are furnished we
don't know if we need to decide it,
what this case does raise is the
complications that arise if the initiation statement is not used as
the starting time in respect
of all respondents allegedly party to
the practice.
[90]
If the initiating statement is the date of initiation for all the
respondents; named and yet to be named, this difficulty is avoided.

We believe this is one reason why the language of section 67(1) is
worded as it is. It states that
"A
complaint in respect of
a
prohibited practice may not
be initiated more than three years after the practice has ceased.
"
[240]
Notably the provision refers to initiation in respect of a 'practice'
not a 'firm'. This is to be contrasted with choice of
language in the
other limitation of action provision, section 67(2). Here there is a
reference to a
firm.
It states:
"A complaint may not
be referred to the Competition Tribunal against any
firm
that has been
a
respondent in completed proceedings before the
Tribunal under the same or another section relating substantially to
the same conduct."
[241]
The choice of the legislature to confine section 67(1) to a practice
without reference to a firm as it does in section 67(2)
is
significant.
[242]
Nor is the reason for this differential treatment simply because one
occurs at initiation stage and the other at referral.
Rather, it
reflects a distinct policy choice for the differential language and
that we suggest is informed by the temporal logic
of the system and
its informational asymmetries.
[243]
We explain it in this way.
[244]
When the Commission initiates it goes without saying it has commenced
rather than concluded its investigation. Granted it
must have some
appreciation that a prohibited practice has occurred, but this does
not mean that it knows with precision the identity
of all the
participants. This is particularly the case in cartels whose
frequently subterranean character means that some participants
may be
known, but others not.
[245]
For instance, it may be that at the initiation stage the Commission
has evidence of communications between some but not all
of the
participants in what may be a cartel. This may be the case if
communications are, as alleged in this case, sometimes bilateral
or
sometimes multilateral. If the Commission has in its possession at
initiation stage only some emails or documents from some

participants, it may have a reasonable belief from that series of
communications that a prohibited practice may have taken place
and
hence an initiation is warranted. But due to the fact that it does
not at that stage know the identity of all the other participants
it
might assume that those initially named constitute the full universe
of the cartel. But later during the investigation it might
discover
that the cartel had more members than initially there appeared to be.
[246]
This is not the only problem. Even if, at the moment of initiation,
the identities of all the allegedly colluding parties
are known to
the Commission generally, they may not be known specifically; i.e.
they may not be known with the precision required
for a citation in a
referral. For instance, different firms in the same group may
generally be known by the same brand name, but
despite this be
incorporated differently. For instance, the 3
rd
and 4
th
respondents both have the name, JP Morgan Chase. Only the anodyne
appendage to the brand name ('& CO' as opposed to 'Bank N.A.')

would alert an investigator early enough to the distinction.
Moreover, since these appendages are not the names commercial players

use in ordinary parlance when communicating amongst themselves, the
distinction may not manifest itself until a much later stage
of the
investigation. Thus, the Commission at initiation stage may well not
yet know that it is dealing with an entity that it
part of a
similarly named corporate family, and if so, which of the entities
are implicated.
[247]
If the initiation against a firm only occurs when it is later named,
or correctly named in an initiation; or deemed to be
named (the
latter in the case of a tacit initiation) this may have the anomalous
result that some firms in the cartel assume liability
(including
civil) because they had the misfortune to be named first, whilst
others, fortuitously only identified later, escape
the three year
time limit. We find no policy reason to interpret the Act to allow
such a result, especially when as we have shown
the language of the
section does not suggest it either.
Part4
Declaratory
Order
[248]
The final application we must consider is Investee's application for
a declaratory order to censure the Commission for the
manner in which
it has prosecuted this matter.
[249]
As background before we consider the terms of the order sought it is
important to set out the legal position in relation to
costs in the
Tribunal. In the leading case on the point,
Pioneer,
[91]
a merger case, the Constitutional Court held that insofar as costs
before the Tribunal were concerned each party was responsible
for its
own costs:
"The purpose
of
the Act is well served in
this reasoning. Considering that the protection of public-interest
concerns will seldom be advanced by
an opposing patty at the Tribunal
stage in the majority of cases,
a
thorough defence
of
the public interest and the
protection of the Commission's decision-making independence
necessitates the preservation of the
"own
costs" rule at the
Tribunal stage. The correct interpretation is therefore that the
Tribunal has no powers
to
award costs against the
Commission under the Act."
[92]
[250]
Investec accepts that this is the legal position but argued that this
does not preclude the Tribunal from giving a declaratory
order of
censure and that there is case law that suggests that in other
instances such an order is competent and has been given
if it is
"fundamentally ancillary to proceedings" before the
Tribunal.'
[93]
[251]
In its Notice of Motion Investec framed the order in this way:
"Declaring that the
Commission's Conduct in prosecuting this referral is vexatious and
unreasonable"
[252]
In its replying affidavit, Investec submitted that the declarator
"is
intended to
mark the conduct of the Commission up until this
point in the referral and to
censure it"
[253]
In Investee's heads of argument it summarizes its position in the
following terms:
"All that the Tribunal is
being asked to determine is whether the Commission's conduct since
February 2017 in prosecuting this
referral has been vexatious
or
unreasonable".
[254]
In support of its application,
Investec reprised the history of the Commission's prosecution in
detail. Since this history has been
set out in our chronology section
it is not necessary to repeat it here. Investec relies on this
history to come to the following
conclusions about the Commission's
conduct:
[94]
254.1 The Commission had not
approached the referral responsibly;
254.2 It had adopted positions on
various issues, only to back track on them later;
254.3 It had caused the respondents
significant prejudice because of its erratic behaviour;
254.4 The respondents have had to
incur substantial unnecessary costs in preparing for hearings that
cannot proceed because of the
Commission's inexplicable actions;
[255]
In the light of this conduct
Investec submitted the Commission had been unreasonable and vexatious
in the manner it was prosecuting
the referral. It argued that the
Tribunal should grant the declaratory order because (i) it would have
a disciplining effect on
the Commission; and (ii) it was important to
mark the inappropriateness of the Commission's conduct because if the
conduct persisted
and the matter was appealed, Investec may seek a
cost order against the Commission before the CAC. If the Commission
had been censured
for its conduct during the Tribunal proceedings
this would be a relevant consideration for the appeal court to have
regard to in
considering costs.
[95]
[256]
The Commission argued that: (i)
the Commission's conduct did not meet the test for vexatious conduct
established by the ordinary
legal meaning of the phrase owing to an
absence of mala tides; (ii) the declaratory order would undermine the
own costs rule before
the Tribunal; and (iii) it would be premature
to decide the declarator prior to a determination of the merits of
the case.
[96]
[257]
Investee's response to this argument was that conventional cost
awards are frequently awarded along the path of litigation
as various
interlocutory and other proceedings are dealt with. It submitted that
when costs are granted in such matters, the cost
order does not
purport to address the merits of the main matter but is particular to
the application in which they are awarded.
Investec submitted that
its declarator asks no more than such conventional cost awards.
[258]
But the Commission argued that the relief sought in the notice of
motion is framed in the broadest possible terms, seeking
to censure
the Commission in respect of all past conduct in relation to the
referral and is not limited to the specific interlocutory

applications.
[259]
We agree with the Commission on this point.
[260]
Investec, in all manifestations of its declarator, asks for a
declaration that the Commission's conduct 'in' prosecuting the

referral is vexatious and unreasonable. The repeated use of the word
'in' as opposed to 'whilst' suggests that the correct interpretation

of the relief sought would be one that requires us to censure not
only the Commission's actions as they relate to the process of

prosecuting its referral, but also its initial decision to prosecute.
But the facts show that Investec does not complain of all
the conduct
of the Commission only certain of it. The relief sought and the
mischief complained of are not consonant.
[261]
But the breadth of the relief is not the only problem with it. The
timing of the application is a problem as well. The premature

declaration of vexatious and unreasonable prosecution has far
reaching consequences in the context of a case that is still ongoing.

Such relief should only be considered at the end of the case and
after the merits have been decided, lest it chill the Commission's

conduct in its further prosecution of the matter which would be
against the public interest. Nor is it correct to argue that an
order
of this nature is akin to a cost order. Its rarity suggests it is a
far graver expression of censure than a costs order.
Unlike an
interlocutory costs order which can be focused on the conduct at
issue, the declaratory order is by its very nature sweeping,
because
it has to conclude that conduct was vexatious, making the analogy
inappropriate.
[262]
In the circumstances Investee's application is dismissed.
[263]
Our decision to dismiss the application at this stage does not
preclude Investec from bringing such an application at the
conclusion
of these proceedings when it would be more appropriate to decide it
with the benefit of the full conspectus of the case
before us. A
ruling at this stage would be premature.
[264]
Our finding on the issue means that we do not need to decide whether
a declarator is consonant with the 'own costs' ruling
of the
Constitutional Court in
Pioneer
and what the correct test is
when defining vexatious conduct, and so we do not address these
issues further.
Conclusion
[265]
In light of the above we make the order that follows.
ORDER
Definitions
For
the purpose of this Order the following terms have been defined:
Complaint
referral
means the application by the Competition
Commission dated 15 February 2017 and as subsequently supplemented by
the affidavits dated
on 31 March 2017, 07 April 2017, and 20 December
2017.
Decem
b
er
affidavit
means the supplementary affidavit to the complaint
referral filed on 20 December 2017.
Excepting
respondents
means Bank of America Merrill Lynch
International Limited (1); BNP Paribas (2); JP Morgan Chase & Co
(3); JP Morgan Chase Bank
N.A (4); Australia and New Zealand Bank
Limited (5); Standard New York Securities Inc (6); Investec Limited
(7); Standard Bank
of South Africa Limited (8); Nomura International
PLC (9); Standard Chartered Bank (1O); Credit Suisse Group (11);
Commerzebank
AG (12); Macquarie Bank Limited (13); HSBC Bank PLC
(14); and HBUS (19); MLPFS (20); Bank of America National Association
(N.A)
(21); Investec Bank Limited (22); and Credit Suisse USA (23).
Pure
peregrini
means Bank of America Merrill Lynch International
Limited (1); JP Morgan Chase & Co (3); Australia and New Zealand
Bank Limited
(5); Standard New York Securities Inc (6); Nomura
International PLC (9); Macquarie Bank Limited (13); HBC Bank USA,
National Association
(N.A) (19); Merrill Lynch Pierce Fenner and
Smith (20) and Credit Suisse Securities (USA) LLC (23);
Local
Peregrinimeans
BNP Paribas (2); JP Morgan Chase Bank N.A (4);
Standard Chartered Bank (10); Credit Suisse Group (11); Commerzebank
AG (12); HSBC
Bank PLC (14); and Bank of America National Association
(N.A) (21).
Remaining
excepting respondents
means all the excepting respondents
other than the pure
peregrini
Having
heard the parties the Tribunal orders that:
Part
A (Exceptions)
In
respect of the exception applications brought by the excepting
respondents in respect of the complaint referral:
[1]
The applications for dismissal of the complaint referral, brought by
the pure
peregrini:
Bank of America Merrill Lynch
International Limited (1); JP Morgan Chase & Co (3); Australia
and New Zealand Bank Limited (5);
Standard New York Securities Inc
(6); Nomura International PLC (9); Macquarie Bank Limited (13); HBC
Bank USA, National Association
(N.A) (19); Merrill Lynch Pierce
Fenner and Smith (20) and Credit Suisse Securities (USA) LLC (23) are
upheld, but subject to paragraph
3.3.1 below;
[2]
Insofar as any of the remaining excepting respondents sought the
dismissal of the complaint referral, such relief is dismissed,
but
subject to the alternative relief granted in paragraph 3 below;
[3]
The applications for alternative relief and/or further particulars of
the remaining excepting respondents are upheld in part,
as follows;
3.1 The Commission must file a new
referral affidavit to substitute for and replace all the complaint
referral affidavits. This
affidavit must be filed within 40 business
days of this order;
3.2 The respondents will only be
required to file their answers to the new referral affidavit; Answers
must be filed within 20 days
of service of the new referral
affidavit;
3.3 The new referral affidavit must
contain an amended notice of motion which provides as follows:
3.3.1
Any order for declaratory relief against the pure
peregrini
must
include the proviso that such relief excludes the operation of
sections 59 and 65 of the Act;
3.3.2
Any order for the imposition of an administrative penalty should be
limited, in the case of local
peregrini,
to the respective
firm's turnover in the Republic and exports from the Republic.
3.3.3
In the event that the Commission cannot allege the particulars set
out in para 3.4.1 then any order against the local
peregrini
will
be limited in the same way as it is to the pure
peregrini
in
terms of paragraph 3.3.1.
3.4 The new referral affidavit must:
3.4.1 In the case of the local
peregrini
respondents set out the facts the Commission relies
to allege that it was
foreseeable
that the impugned conduct
would
have a direct or immediate, and substantial effect in the
Republic;
3.4.2 Confine the case to a single
overall conspiracy (SOC), provided, subject to 3.4.3 below, that the
Commission is not restricted
from alleging that this may be founded
on an agreement, arrangement or concerted practice;
3.4.3 Indicate whether the same facts
are relied on for proof of the concerted practice or allege any
different facts if they are
not;
3.4.4 Allege whether its case for an
SOC relies on proof of an express agreement or arrangement or whether
this is an inference
based on facts; if the latter, allege in general
terms what those facts are;
3.4.5 Provide each respondent with a
date, or period. in which they are alleged to have joined the SOC or
deemed to have joined
the SOC;
3.4.6 Provide the facts that are
relied on to prove that the particular respondent joined or had
joined the SOC;
3.4.7 If the SOC has ceased;
3.4.7.1 provide what dates the SOC is
alleged to have ceased;
3.4.7.2 what facts are relied on for
establishing that the conduct had then ceased; and
3.4.7.3 whether all the respondents
remained participants in the SOC on that date; and, if not, when the
respective respondent/s
exited.
3.4.8 If the SOC is still alleged to
be ongoing;
3.4.8.1 what facts this is based on;
and
3.4.8.2 Whether all the respondents
are still part of it; if not, when the respective respondent/s
exited;
3.4.8.3 In relation to the
relationship between the respondent banks and their respective
traders:
3.4.8.3.1 Is it alleged that some
traders acted for more than one respondent at the same time? If so,
details should be provided;
3.4.8.3.2 If a trader ceased to act
for a respondent bank, did this end the respondents' participation in
the SOC or if not, on
what basis is it alleged that the respondent's
participation continued?
3.4.8.3.3 Is it alleged that all the
traders named as participants in paragraph 40 the December affidavit
were so-called active
participants or were some so called passive
participants;
Part
B (Joinder applications)
[4]
In respect of the application for joinder brought by the Competition
Commission dated 12 January 2018, read with the December

supplementary affidavit:
4.1 Leave to join the twenty second
respondent (Investec Bank Limited) is granted;
4.2 Leave to join HBUS (19), MLPFS
(20), BANA (21) and Credit Suisse Securities (23) is deferred for
consideration pending the Commission's
compliance with the
requirements of paragraph 3, other than 3.3; and then only, in the
event of such compliance, the relief sought
in the Notice of Motion
is to be limited as follows:
4.2.1
In the case of BANA to comply with 3.3.2; and
4.2.2
In the case of HBUS (19), MLPFS (20), and Credit Suisse Securities
(23) as limited by the operation of paragraph 1 to only
the relief
provided for in paragraph 3.31.
Part
C (Strike Out)
[5]
In respect of the application for strike out brought by the third and
fourth respondents:
5.1 Paragraphs 145 to 152 and
corresponding annexures of the December supplementary are struck out
and should not be included in
the amended referral submitted in terms
of 3.1 of this order.
Part
D (Declaratory order)
[6]
In respect of the application for a declaratory order brought by the
seventh respondent (Investec Limited):
6.1
The application is dismissed.
Part
E
(General)
In
respect of all the applications brought above:
[7]
There is no order as to costs; and
[8]
Condonation is granted in respect of any late filing.
_____________________
Mr
Norman Manoim
_____________________
Ms
Yasmin Carrim
_____________________
Ms
Yasmin Carrim
_____________________
Ms
Mondo Mazwai
12
June 2019
Date
Tribunal
case managers: Aneesa Ravatt Karissa Moothoo-Padayachie, Alistair
Dey- van Heerden, Ndumiso Ndlovu, Andiswa Nyathi.
For
the Commission: D Mpofu S.C, T Ngcukaitobi, A Hassim, F Hobden, H
Drake, L Zikalala and I Kentridge
instructed by
Ndzabandzaba
Attorneys.
For
the first, twentieth and twenty-first respondents: P Farlam S.C., P
Ngcongo
and
M Mbikwa
instructed by
Webber Wentzel
Attorneys.
For
the second respondent: J Campbell S.C.
instructed by
Bowmans.
For
the third and fourth respondent: M van der Nest S.C
and
D
Turner
instructed by
Webber Wentzel.
For
the fifth respondent: C Loxton S.C., R Pearse,
and
P Pillay,
instructed by
Cliffe Dekker Hofmeyr.
For
the sixth and eighth respondents: A Subel S.C.
and
G
Engelbrecht
instructed by
Herbert Smith Freehills.
For
the seventh respondent: W Trengove S.C.
and
K Hofmeyr
instructed by
Edward Nathan Sonnenbergs.
For
the ninth respondent: J Butler S.C.
instructed by
Faskens
Attorneys.
For
the tenth respondent: F Snyckers S.C.
and
A Msimang
instructed
by
Webber Wentzel.
For
the eleventh and twenty­ third respondents: W Luderitz S.C.
and
G Marriot
instructed by
Werksmans Attorneys.
For
the twelfth respondent: R Bhana S.C.
and
L Sisilana
instructed
by
Webber Wentzel.
For
the thirteenth respondent: J Wilson S.C.
and
P Bosman
instructed by
Falcon & Hume.
For
the fourteenth and nineteenth respondents: A Cockrell S.C.
and C
Avidon
instructed by
Baker McKenzie.
[1]
These reasons deal with the various applications under Tribunal case
numbers: CR212Feb17/EXC036May17; CR212Feb17/EXC040May17;

CR212Feb17/EXC032May17 ; CR212Feb17/EXC029May1;
7CR212Feb17/EXC034May17; CR212Feb17/EXC035May17;
CR212Feb17/EXC042May17; CR212Feb17/EXC033May17;

CR212Feb17/0TH121Jul17; CR212Feb17/EXC030May17;
CR212Feb17/EXC031May17; CR212Feb17/EXC037May17;
CR212Feb17/EXC028Apr17; CR212Feb17/EXC032Mar18;

CR212Feb17/0TH270Jan18.
[2]
HBUS (19), MLPFS (20), BANA (21) , and Credit Suisse Securities
(23).
[3]
This consent agreement (CR212Feb17/SA220Feb17) was approved by the
Tribunal on 26 April 2017.
[4]
See Referral of Complaint by the Commission of 15 February 2017 CT
Case Number CR212Feb17 (February affidavit) para 25.
[5]
Transcript of Pre-hearing 1O March 2017 p31 line 10 - p32 line 3:
“
ADV Maenetie:
So, what we
decided with the leave of the Tribunal is that instead of the
parties submitting exceptions upfront, what we will
do is we will
first supplement, which will be by the 31st of March. We will
supplement the referral, addressing those of the
complaints that we
are able to address or we believe have merit addressing. Then the
parties will consider the supplemented referral
and decide whether
to file exceptions or to answer and if they file exceptions, they
will file them by the 3rd of May 2017 and
that date looks longer,
but that is because of the many public holidays in April and some in
May."
[6]
In the March affidavit the Commission had repeated which respondents
it did not seek a penalty from, omitting the eighteenth
respondent-
which had been an error.
[7]
Transcript of Pre-hearing 23 June 2017 p31 lines 18-21.
[8]
These respondents were BNP Paribas (BNP Paribas) (2); JP Morgan
Chase and Co. ('JP Morgan') (3); JP Morgan Chase Bank N.A ('JP

Morgan Bank') (4); Australia and New Zealand Banking Group Limited
('ANZ') (5); Nomura International PLC ('Nomura') (9); and
Standard
Chartered Bank ('SCB') (10).
[9]
Note that these respondents had not ignored the referral. Rather
they had filed their objections in the form of a letter rather
than
a pleading. In substance, if not in form, the letter served the same
purpose.
[10]
Transcript of Separation Application Hearing 28 August 2017 p57
lines 3-4.
[11]
For the purposes of our analysis, we consider Investec Limited (7)
and Investec Bank Limited (22) to be the same entity.
[12]
See for instance the sources cited by Prof CMJ Ryngaert who observes
after noting that states still continue to consider territoriality

as the basis for delimiting competences between them that: "As
a result, jurisdictional analysis remains centred on territorial

connections even where such connections become increasingly
artificial, e.g. in the case of essentially non-territorial
cyberspace,
or global climate change." CMJ Ryngaert 'The
Concept of Jurisdiction in International Law' in Orakhelashvili,
Research Handbook
on Jurisdiction and Immunities in International
Law (Edward Elgar Publishing Limited) 2015 p52-53.
[13]
Bid Industrial Holdings (Ply) Ltd v Strang and Others (615/06)
[2007} ZASCA 144 (Strang).
[14]
Strang ibid para 47.
[15]
Strang ibid para 55.
[16]
Strang ibid para 56.
[17]
Multi-links Telecommunications Ltd v Africa Prepaid Services Nigeria
Ltd and Others, Telkom SA Soc Ltd and Another v Blue Label
Telecoms
Ltd and Others
[2013] 4 All SA 346
(GNP) (Multi-Links).
[18]
The court found the following factors connecting the peregrinus, a
firm called APSN, to the jurisdiction of a South African court,

inter alia they were:
•
APSN had concluded the
agreement which was the subject of the litigation before the court,
as an incola of South Africa - this
is because the agreement was
entered into by APS, a company incorporated in South Africa;
•
APSN was a subsidiary of, and
was at all material times controlled by APS and Blue Label who were
both South African entities;
•
APSN nominated a domicilium
citandi et executandi within the court's area of jurisdiction;
•
APSN agreed to an arbitration
clause in the agreement, specifying that arbitration would take
place in South Africa;
•
APSN had itself invoked the
arbitration clause in South Africa in pending arbitration
proceedings that preceded the court action;
•
Five of the six defendants
(except APSN) resided within the court's area of jurisdiction;
•
the defendants were sued
jointly and severally meaning that any judgement in favour of Multi­
Links would be capable of effective
execution in South Africa;
•
the factual events giving rise
to the claim occurred mainly in the area of the jurisdiction of the
court.
[19]
Section 64(1) of the Act which states that: "Any decision,
judgement or order of the Competition Commission, Competition

Tribunal or Competition Appeal Court may be served, executed and
enforced as if it were an order of the High Court".
[20]
Section 2(b) of the Act.
[21]
See Ryngaert (note 12 above) p70-71.
[22]
City of Cape Town v WBHO Construction (Pty) Ltd and Others
(86873/2014) [2017] ZAGPPHC 271 (31 March 2017) (City of Cape Town).
[23]
See City of Cape Town (note 22 above). In that case the problem
arose because the case was based on a consent agreement which
was
under inclusive of its description of the cartel participants. It
appears the amendment was required so the plaintiff could
more fully
narrate its claim. Against the objection of the defendant (who had
been cited in the declaratory order) the court
allowed the
amendment.
[24]
See March affidavit para 13, Record p59.
[25]
December affidavit para 36, Record p78.
[26]
Act 94 of 1990.
[27]
See section 34(1) which states: An institution which has been
established in a country other than the Republic and which lawfully

conducts in such other country a business similar to the business of
a bank (hereinafter in this section referred to as a foreign

institution), may not establish a representative office in the
Republic without having previously obtained the written consent
of
the Registrar.
[28]
Aldrick v Anchor Coal Co. 41 Am. State Rep. 831 as cited in Appleby
(Ply) v Dundas Ltd 1948(2) SA 905 (E) and again with approval
in
Bisonboard Ltd v K Braun Woodworking Machinery (Pty) Ltd
[1990] ZASCA 86
;
1991 (1) SA
482
, and Land Another v Minister of Home Affairs and Others
2015 (4)
SA 197
(GJ) at para 91.
[29]
E.M. Fox National law, global markets, and Hartford: Eyes wide shut
Antitrust Law Journal Vol. 68, No. 1 (2000), pp. 73-86 at
page 73.
[30]
US Department of Justice and Federal Trade Commission Antitrust
Guidelines for International Enforcement and Cooperation Issued
13
January 2017 p21.
[31]
Intel Corporation v Commission Case T-286/09 ECLl:EU:T:2014:547
(Intel).
[32]
ibid paras 231-232.
[33]
Gencor v Commission Case T-102/96
[1999} ECR 11-753
para 90.
[34]
Intel Corporation v European Commission Case C-413/14 P
ECLl:EU:C:2017:632 para 49.
[35]
American Natural Soda Ash Corporation and Another v Competition
Commission 2003 (5) SA 663 (CAC).
[36]
ibid para 18.
[37]
See American Natural Soda Ash Corporation and Another v Competition
Commission of South Africa (2005]
3 All SA 1
(SCA) (13 May 2005)
para 29 quoting para 18 of the CAC decision with approval.
[38]
Paragraphs 45.5.5; 45.4.4; 45.2.4; and 45.1.4, Record p28-35.
[39]
March Affidavit para 17, Record p60.
[40]
The Commission does allege both direct and indirect price fixing.
See February affidavit para 40, record p25
[41]
For instance, the submission from Commerzbank regarding particulars
required to determine whether or not the action was time
barred in
terms of section 67(1).
[42]
February affidavit para 40, Record p25.
[43]
See Netstar (Pty) Ltd andothers v Competition Commission and
another(2011) 1 CPLR 45 (CAC)
[44]
See December affidavit para 49.2 as an example but the pattern is
repeated throughout paragraphs 49-144 of the affidavit, record

p91-123.
[45]
See paragraphs 2.1 and 2.3 read with the covering form to the
initiation, Record p40-45. Note that not all the present respondents

were identified in this initiation document.
[46]
ibid para 5.1-5.2, Record p44.
[47]
See paragraph 5.2 of the Initiation statement, Record p44.
[48]
ibid para 5.4, Record p45.
[49]
See para 4.3 of the Amended initiation statement, Record p53.
[50]
See para 45 of February referral, Record p27: "Below we set out
the bilateral and multilateral agreements through which
the
respondents implemented their overarching agreement to fix prices of
bids, offers and bid offer spreads as well as dividing
markets."
[51]
December affidavit para 45, Record p90
[52]
See December affidavit para 41.2.5, Record p83.
[53]
December affidavit para 41.4, Record p84.
[54]
Transcript of Exception Proceedings 30 July 2018- 3 August 2018
(Transcript) p324. Note the reference to the paragraph should
be
paragraph 41.2 of the December affidavit.
[55]
As he put it: "The Bloomberg chatroom simply provided a forum,
in other words it is the smoke filled darkroom, and when
you got in
you full knew what you were getting into." Transcriptp325.
[56]
Transcript p325, line 23- p326 line 3.
[57]
See our decision in Tourvest Holdings (Pty) v The Competition
Commission (and a related matter) CT Case numbers
CR209Feb17/EXC134Aug17
and CR209Feb17/EXC132Aug17 (10 January 2018)
(CT).
[58]
We think this is what it means by paragraph 41.2.4 of the December
affidavit which states: Through the exchange of instant messages,

the participants in a chatroom would engage in bilateral or
multilateral communications or conversations with one or more
participants
in the chatroom.
[59]
See December affidavit para 135, Record p120.
[60]
See February affidavit at para 45.4, some eleven are listed compared
to the 23 listed in December.
[61]
A requirement of section 33 of the Constitution of the Republic of
South Africa, 1996 is that everyone has a right to just

administrative action that is lawful, reasonable, and procedurally
fair, while section 52(2) (a) of the Act imposes a requirement
on
the Tribunal to ensure that proceedings are conducted in accordance
with the principles of natural justice.
[62]
See sections 59(3)(a) of the Act which sets out the factors to be
considered in the imposition of a penalty which includes inter
alia,
".. .duration, gravity and extent".
[63]
See section 65 of the Act for civil actions which are dependent on a
prior finding of liability by the Tribunal.
[64]
See the CAC's Judgement in The Competition Commission of South
Africa v Pickfords Removals SA (Pty) Ltd 167/CAC/Jul18 (3 April

2019) ('Pickfords'), and Pickfords Removals SA (Pty) Ltd v
Competition Commission £201811 CPLR 390 (CT) (Pickfords CT)

for analysis on when a concerted practice ends.
[65]
Team Relocations v Commission Case T-204/08 EU:T:2011:286 para 37
quoted with approval by the Court of Justice in the appeal
against
the General Court judgement: C-444/11 P EU:C:2013:464.
[66]
C204/00 P etc Aalborg Portland A/S v Commission EU:C:2004:6 para 85;
C444/11 P Team Relocations v Commission EU:C:2013:464 para
56.
[67]
These summaries of the decisions appear in a useful discussion in
Whish and Bailey, Competition Law 91h Edition, pages 107-8.
[68]
Opinion of Advocate General Wahl Intel Corporation Inc v European
Commission (20 October 2016) ECLl:EU:C:2016:788 para 180-182
as
cited in Ba/moral Tanks Limited v The Competition and Markets
Authority [2019) EWCA Civ 162.
[69]
We note the cautionary language in the recent CAC case of Pickfords
that it would not be correct to think of the section 67(1)
as a
prescription period but rather as a limitation or expiry period.
Nevertheless, like us, the court found it useful to use
the word
prescription as a shorthand for repeating the whole provision. See
Pickfords (note 64 above.)
[70]
See paragraphs [239] to [247) below.
[71]
In Power Construction v Competition Commission 145/CAC/Sep16 (2 May
2017) para 45, the CAC had to determine when the practice
had ceased
in relation to a bid rigging conspiracy in the construction
industry. The Court held that the practice ceased when
the last
payment was made to the winning bidder.
[72]
See February affidavit paragraph 6.3:
"the conduct may be ongoing"
and December affidavit paragraph 40 “the terms of the ongoing
arrangement, agreement
and concerted practice were..."
[73]
The Competition Commission v Pioneer Foods (Pty) Ltd
[2009] 2 CPLR
323
(CT) para 73-74.
[74]
Pickfords CT (note 64 above) para 93.
[75]
See para 31 of the February affidavit, Record p21.
[76]
See the February affidavit where it is alleged that Katz acted for
BNP Paribus (para 45.2.5) then it is alleged that at some
point
during the period 2007 to 2013 he represented Standard New York and
Barclays (Para 45.2.6 and 45.3.4), Record p30.
[77]
See para 45.5.3 of the February affidavit, also para 45.3.3, Record
p35.
[78]
para 31, Record p804.
[79]
See HBUS affidavit in answer to the application for joinder, para
37, Record p828. HBUS also alleges that Hatton ceased employment

with it in October 2010 which would suggest on its version Hatton
could not have been engaged in activity on its behalf on any
of the
dates suggested by the Commission as all those dates are after the
date of his termination. Para 35.2, Record p828.
[80]
Netstar (note 42 above) para 25.
[81]
Omnico (Proprietary) Limited and others v Competition Commission; In
re: Competition Commission v Pienaar and others
[2013] 1 CPLR 342
(CT).
[82]
Ibid para 29.
[83]
See cases 209/78 etc Van Landewyck v Commission EU:C1980:248, p3310.
Quoted in Whish (note 67 above) p104.
[84]
See Whish (note 67 above) p104.
[85]
S1 of the Act.
[86]
December affidavit para 145, Record p123.
[87]
See Third and Fourth Respondent's Notice of Objection, Record p483.
[88]
Note that JP Morgan Chase (3) is one of the class of pure peregrini
so the prejudice here would be limited to the reputational
harm of a
potential declaratory order if the Commission establishes the
contravention.
[89]
Of course, if item (iv) the cause of action is not made out then
this has implications for the entire case against all the

respondents not just those sought to be joined.
[90]
At present the law is unclear on three issues.
Is
it sufficient for the Commission to allege in the initiation as it
did in April 2015 that there was a single overall conspiracy
and
mention the respondents then known to it but not all of them? The
Loungefoam case [Loungefoam (Pty) Ltd and others v Competition

Commission and others; In re Feltex Holdings (Pty) Ltd v Competition
Commission and others and two related review applications
[2011)
1
CPLR 19
(CAC)) suggests it is not but the Commission disputes this
interpretation of the decision.
Further,
Loungefoam may need to be reconsidered in the light of the SCA's
later Omnia decision [Competition Commission v Yara
(SA)(Pty) Ltd
(784/12) {2013) ZASCA 107 (13 September 2013)) where the distinction
between the consequences of an initiation
and a referral is given a
much clearer explanation.
Third,
in Loungefoam the linguistic distinction between two limitation on
action provisions in section 67 is not discussed and
may well not
have been brought to the court's attention.
[91]
Competition Commission of South Africa v Pioneer Hi-Bred
International Inc and Others
2014 (2) SA 480
(CC) (18 December
2013).
[92]
Ibid para 40.
[93]
Investec relied upon the dicta in Simon NO v Air Operations of
Europe 1999(1) SA 217 (SCA) at 231B-C.
[94]
Investec Declarator Application, p13-18, para 50-78. See also
Investec HOA para 66-90 p273- 281.
[95]
Investec June HOA para 94.2, Record p282
[96]
We condoned the late filing of the Commission's answering affidavit
as such was done in accordance with a timetable established
as an
exercise of the Tribunal's broad powers in terms of Rule 55 which
was fair and ensured no prejudice accrued to Investec.