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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No:IR153Dec21
In the matter between:
Mohammed Iqbal Survé First Applicant
Sekunjalo Investment Holdings (Pty) Ltd Second Applicant
African Equity Empowerment Investment Ltd Third Applicant
Afrinat (Pty) Ltd Fourth Applicant
Bioclones (Pty) Ltd Fifth Applicant
Sekpharma (Pty) Ltd Sixth Applicant
Orleans Cosmetics (Pty) Ltd Seventh Applicant
ESP Africa (Pty) Ltd Eighth Applicant
Premier Fishing and Brands Ltd Ninth Applicant
Premier Fishing SA (Pty) Ltd Tenth Applicant
Marine Growers (Pty) Ltd Eleventh Applicant
Talhado Fishing Enterprises (Pty) Ltd Twelfth Applicant
Ayo Technology Solutions Ltd Thirteenth Applicant
Health System Technologies (Pty) Ltd Fourteenth Applicant
Global Command & Control Technologies (Pty) Ltd Fifteenth Applicant
Kalula Communications (Pty) Ltd Sixteenth Applicant
Kathea Communications (Pty) Ltd Seventeenth Applicant
Sekunjalo Properties (Pty) Ltd Eighteenth Applicant
3 Laws Capital South Africa (Pty) Ltd Nineteenth Applicant
Cape Sunset Villas (Pty) Ltd Twentieth Applicant
Silo Cape Waterfront (Pty) Ltd Twenty-First Applicant
African News Agency (Pty) Ltd Twenty-Second Applicant
South African Press Association (Pty) Ltd Twenty-Third Applicant
Magic 828 (Pty) Ltd Twenty-Fourth Applicant
Independent Newspapers (Pty) Ltd Twenty-Fifth Applicant
Independent Media Consortium (Pty) Ltd Twenty-Sixth Applicant
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Sagarmatha Technologies Ltd Twenty-Seventh Applicant
Loot Online (Pty) Ltd Twenty-Eighth Applicant
Surve Philanthropies NPC Twenty-Ninth Applicant
The Sekunjalo Foundation Development Trust Thirtieth Applicant
The Doctor Iqbal Surve Bursary Trust Thirty-First Applicant
The Social Entrepreneurship Foundation Trust Thirty-Second Applicant
Haraas Trust Thirty-Third Applicant
Linacre Investments Thirty-Fourth Applicant
Kilomax Investments Thirty-Fifth Applicant
Business Venture Investments NO 1126 (Pty) Ltd Thirty-Sixth Applicant
and
Nedbank Ltd First Respondent
Standard Bank of South Africa Ltd Second Respondent
First Rand Bank Ltd Third Respondent
ABSA Bank Ltd Fourth Respondent
Mercantile Bank Ltd Fifth Respondent
SASFIN Bank Ltd Sixth Respondent
Investec Bank Ltd Seventh Respondent
Bidvest Bank Ltd Eighth Respondent
Access Bank Ltd Ninth Respondent
The Competition Commission Tenth Respondent
Panel : Mondo Mazwai (Presiding Member)
: AW Wessels (Tribunal Member)
: Liberty Mncube (Tribunal Member)
Heard on : 07 & 08 March 2022
Reasons issued on : 16 September 2022
REASONS FOR DECISION AND ORDER
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Introduction
[1] This matter involves thirty -six Applicants (“the Sekunjalo Group” or “the Applicants”)
seeking interim relief, in terms of section 49C of the Competition Act No 89 of 1998, as
amended ("the Act") against the First to Ninth Respondents (“the Respondent Bank s”
or “the Respondents”).
[2] The Tenth Respondent, the Competition Commission (“the Commission”), was the
subject of a joinder application brought by the Applicants under case no.
IR153Dec21/JOI185Feb22.1 The joinder application was not opposed by any of the
Respondent Banks.
[3] In their interim relief application, the Applicants sought an order, pending the final
determination of the complaint being investigated by the Commission:
3.1. Interdicting the First R espondent (“Nedbank”) and the Second Respondent
(“Standard Bank”) from closing the bank accounts of those of the Thirty -Six
Applicants who still have bank accounts with them, or in any way unilaterally
changing the terms and conditions attaching to those bank accounts;
3.2. Directing the remaining Respondent Banks to restore all the bank accounts of
those of the thirty -six Applicants that each has closed on the same terms and
conditions that attached to those bank accounts, including all services that
Standard Bank, the Third Respondent (“First Rand Bank”), and the Fourth
Respondent (“ABSA”) provided to the relevant Applicants; and
3.3. Interdicting all the Respondent Banks from closing the respective Applicants’ bank
accounts for any reason not sustainable in law, or unilaterally changing the terms
and conditions that attach to those accounts.
1 The joinder was brought in order to comply with Rule 26(2) of the Rules for the Conduct of Proceedings which
requires the Applicants to serve an interim relief application on the Commission.
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Factual background
[4] We first detail the factual background surrounding this application in order to
contextualise these reasons and the decision that follows.
[5] The Applicants, the Sekunjalo Group, is a group of about 200 companies, 85 of which
are of scale in terms of revenue and asset value. The Sekunjalo Group is a diversified,
black owned and black controlled Group with interests in Media and Publishing, ICT,
Healthcare and Pharmaceuticals, Energy and Power, Asset Management and Financial
Services, Biotechnology, E -commerce, Fishing and Aquaculture, Private Equity and
Investments and Telecommunications.
[6] The interim relief is sought pending the final determination of a complaint lodged by the
Applicants with the Commission. The essence of the complaint filed with the
Commission is that the conduct of the banks in refusing to provide banking and payment
services to the Applicants contravenes sections 4, 5 and 8 of the Act.
[7] The Sekunjalo Group seeks an order against ABSA, FNB, Mercantile Bank, Sasfin,
Investec, Bidvest and Access Bank to restore banking and payment services, and
against Nedbank and Standard Bank to stop it unilaterall y terminating banking and
payment services to the Applicants. It also seeks an order interdicting all the
Respondent Banks from closing the respective Applicants’ bank accounts for any
reason not sustainable in law, or unilaterally changing the terms and conditions that
attach to those accounts.
[8] The Applicants submit that their case is about:
8.1. The maintenance of the banking relationships between the Applicants and the
Respondent Banks until the Commission has completed its investigation on the
competition complaint that the Applicants have lodged against the banks; and
8.2. The restoration and maintenance of their bank accounts until the Commission
has made a finding on whether the banks are guilty of violating the Act.
[9] In terms of harm to competition t he Applicants argue that their case is that without
[9] In terms of harm to competition t he Applicants argue that their case is that without
access to banking and payment services, the y would ultimately cease to trade, and
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effective competition within the various markets in which they operate will be eliminated.
This will reverse some of the serious transformational g ains in the media, ICT,
healthcare and fishing sectors where the Applicants inter alia operate. It is in this context
that the Applicants bring the interim relief application against the Respondent Banks.
[10] In sum, the Applicants’ main competition case in relation to the Respondent Banks’
conduct is as follows:
10.1. First, the Respondent Banks as parties in a horizontal relationship (competitors)
have coordinated their conduct in terminating or refusing (and, in the case of
Standard Bank, significantly curtailing) the provision of banking and payment
services to the Applicants. The timing and reasons provided therefor show that
the Respondent Banks have engaged in an agreement and/or a concerted
practice in contravention of section 4(1)(a) and/or 4(1)(b) of the Act.
10.2. Second, the Respondent Banks are in a vertical relationship with the Applicants.
The agreements regulating the business relationship between the Applicants and
the Respondent Banks contain express or implied terms which have the effect of
substantially preventing or lessening competition in the markets, because they
permit the Respondent Banks to cease providing banking and payment services
to the Applicants. These agreements allegedly contravene section 5(1) of the
Act.
10.3. Third, the Respondent Banks have refused to supply scarce services to the
Applicants in circumstances where it is economically feasible to do so. This
conduct amounts to an abuse of a dominant position in contravention of section
8(1)(d)(ii), alternatively section 8(1)(c) of the Act.
[11] The Respondent Banks offer a broad range of financial goods and services to millions
of personal and corporate clients in South Africa. They are registered and licensed
banks under the Banks Act, 1990 ("Banks Act") and are licensed financial services
banks under the Banks Act, 1990 ("Banks Act") and are licensed financial services
providers in terms of section 8 of the Financial Advisory and Intermediary Services Act,
2002 (“FAIS”).
[12] The Respondent Banks contend that, at its core, this case concerns the right and ability
of the banks to enforce the contractual terms that govern the s ubsistence and
management of accounts lodged with them, where the accounts in question may cause
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the bank significant reputational risk. The enforcement of these contractual terms does
not constitute a contravention of sections 4, 5 or 8 of the Act.
[13] The Respondent Banks allege that the reputational risk forming the bedrock of their
respective decisions to terminate /curtail the accounts of the Applicants arose from
allegations of malfeasance and impropriety against the Applicants , including by a
Commission of Inquiry into the Public Investment Corporation (“PIC”), chaired by the
Honourable Justice Mpati (“the Mpati Commission”).
[14] The Respondent Banks submit that they each engaged transparently in good faith with
the Applicants, and independently of each other, raising with the Applicants numerous
transactions and seeking explanations and underlying documents in respect thereof in
order to assess any potential risk to the banks.
[15] The Respondent Banks submit that the Applicants’ responses to those requests were
inadequate or not forthcoming. The Applicants dispute this.
[16] The Respondent Banks submit that dealing with the Applicants, who are allegedly
implicated in wrongdoing, is a reputational risk to them. They submit that it is this risk
which explains the terminations/reviews of the Applicants’ accounts rather than
prohibited conduct under the Act.
[17] The Respondent Banks further rely on the Supreme Court of Appeal (“SCA”) judgement
of Bredenkamp v Standard Bank of South Africa , wherein the SCA considered the
entitlement of a bank to cancel unilaterally a contract between it and its customer ,
including for reputational risk.
[18] The Respondent Banks conclude, with their customers, contracts which regulate the
rights and obligations of the banks and its customers respectively. They contain the
express or implied term that the banks may terminate the contract between itself and
the client. This position was affirmed in Bredenkamp wherein the SCA:
18.1. reiterated the trite principle of common law that a contract of an indefinite
18.1. reiterated the trite principle of common law that a contract of an indefinite
duration, including a contract between a bank and a client, may be terminated
on reasonable notice;
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18.2. found that a contractual term empowering a bank to terminate a contract with a
client was not constitutionally objectionable;
18.3. indicated that it would be inequitable to force a bank to remain in a contractual
relationship with a customer where it considers the relationship to pose
commercial, legal, or reputational risks; and
18.4. held that a bank is entitled to terminate its banking relationship with any client on
reasonable notice and was not obliged to give reasons for its decision to do so.
[19] The Respondent Banks submit that the Applicants have not made out a case with
regards to sections 4, 5, and 8 as the closure of the bank accounts is contractual.
[20] Furthermore, the Respondent Banks point out that they have an obligation in terms of
South African law to implement sound risk management processes, procedures and
controls to manage financial crime risks.
[21] Financial crime risks include the risk that a customer of the bank may be involved in
money laundering or other financial crime. Regulation 39 of the Regulations Relating to
Banks, promulgated in terms of section 90 of the Banks Act, specifically requires a bank
to consider reputational risk in its management of risk. Regulation 39(3) provides as
follows:
“The conduct of the business of a bank entails the on -going management of
risks, which may arise from the bank’s on -balance sheet or off-balance sheet
activities and which may include, among others, the following types of risk:
…
(h) detection and prevention of criminal activities
…
(n) reputational risk
…
(aa) any other risk regarded as material by the bank.”
[22] Regulation 39(4) obliges every bank to have in place comprehensive risk management
processes, practices and procedures and board approved policies to identify, monitor,
appropriately mitigate and report (amongst others), the risks listed in Regulation 39(3).
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[23] Regulation 36(17)(a)(iv) provides that every bank shall have in place comprehensive
risk management processes and procedures to prevent the bank f rom being used for
money laundering or other unlawful activity. The South African Reserve Bank ("SARB")
is empowered to revoke any bank's licence for failure to comply with Regulation 36.
[24] The Financial Intelligence Centre Act 38 of 2001 ("the FIC Act") also stipulates that an
accountable institution must implement specific controls to combat financial crime. As
registered banks, the Respondent Banks fall within the definition of an accounta ble
institution and must comply with the provisions of inter alia Chapter 3, Part 1 of the FIC
Act.
[25] The duties under Section 21 of the FIC Act are explained under Guidance Note 7 issued
by the Financial Intelligence Centre (“the FIC”) in October 2017. The Guidance Note
enjoins banks to apply international best practice to maintain relevant client details. It
requires that accountable institutions should apply their client identification and
verification procedures to existing clients on the basis of materi ality and risk. The
Guidance Note further requires that banks conduct due diligence reviews of such
existing relationships at appropriate times.
[26] One of the goals of the FIC Act is to detect and prevent money laundering. Money
laundering, which is a crimin al offence under the Prevention of Organised Crime Act
1998, is generally conduct aimed at concealing or diminishing the proceeds of crime so
as to avoid or frustrate prosecution.
[27] Section 29 of the FIC Act obliges accountable institutions, such as the Res pondent
Banks, to report suspicious transactions to the FIC. This obligation arises inter alia when
the Respondent Bank knows or reasonably ought to know that one of its customers has
engaged or been involved in money laundering.
[28] A failure by the bank to adhere to its obligations to implement adequate financial crime
[28] A failure by the bank to adhere to its obligations to implement adequate financial crime
controls would expose it to regulatory sanctions by the SARB. The sanctions may have,
inter alia, harmful financial consequences.
[29] Consequently, the Respondent Banks are of the view that it is important that they be
permitted to choose their clients, identify the risks that clients expose it to, and
determine whether these risks justify the termination of relationships with specific
clients.
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[30] We turn now to detail the events leading to the closure of the Applicants accounts.
The Respondent Banks’ perspectives on the closure of accounts
[31] The Respondent Banks argue that the Sekunjalo Group has been the subject of
allegations of disreputable and unlawful conduct that has featured extensively in the
public domain. The y state that the allegations centre on the relationship and
transactions between companies in the Sekunjalo Group on the one hand, principally
Ayo Technology Solutions Ltd (“ Ayo”), and the Public Investment Corporation ("PIC")
on the other hand, from December 2017 to date.
[32] The allegations have also been the subject of a Commission of Enquiry, chaired by the
Honourable Justice Mpati, and called into being by President Ramaphosa in terms of
section 84 of the Constitution.
[33] The Mpati Commission has reported the allegations to be well -founded and deeply
troubling. It has recommended further legal investigation and action against the PIC,
Sekunjalo, AEEI and several of its subsidiaries, and other implicated individuals. The
Mpati Commission's report and recommendations have generated much furth er
adverse publicity for the Sekunjalo Group and its management.
The allegations around the Ayo-PIC deal
[34] The PIC is a state-owned financial services provider and asset manager.
[35] In May 2019, the PIC and the GEPF sued Ayo for R4.29 billion. They instituted their
action in the Western Cape Division.
[36] The PIC and the GEPF in their particulars of claim allege inter alia that:
36.1. Ayo, represented by Dr Survé and others, made material misrepresentations,
and failed to disclose material facts, to the PIC before the conclusion of the
subscription-of-shares agreement. In particular, it grossly overstated its business
prospects and the value of its shares.
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36.2. The PIC, represented by Dr Matjila, had purported to conclude the transaction
with Ayo without first obtaining the mandatory approval to do so by the PIC’s
Executive Committee. Moreover, the PIC concluded the transaction even though
it had not done a due diligence investigation into Ayo.
[37] The Respondent Banks emphasise that they do not purport to prove or disprove the
allegations. They merely seek to show, as is apparent on the face of the particulars of
claim, that the PIC and the GEPF hav e in fact made those allegations against Ayo in
court papers.
The Mpati Commission
[38] In March 2020, President Ramaphosa published a comprehensive report of the Mpati
Commission of Enquiry.
[39] The Mpati Commission confirmed in its report that it enquired into the propriety and
lawfulness of the PIC’s transaction with Ayo, and the potential transaction with
Sagarmatha Technologies Limited ("Sagarmatha"), a company controlled by Sekunjalo,
following negative media reports about the PIC’s engagements with these companies.
As part of its enquiry into the Ayo transaction, the Mpati Commission also considered
evidence relating to Premier Fishing, among other Sekunjalo Group companies.
[40] According to the Mpati Commission, the evidence before it showed inter alia that:
40.1. Premier Fishing is a subsidiary of AEEI and is part of the Sekunjalo Group.
40.2. Ayo approached the PIC to participate in the pre -listing private placement.
Represented by Dr Matjila, the PIC subscribed for 99.8 million shares at an
aggregate purchase consideration of R4,3 billion.
40.3. This purchase consideration was based on a grossly inflated and incorrect
valuation of Ayo. Dr Survé performed an “outright manipulation” of the valuation
numbers to achieve this inflated valuation. Dr Mat jila acquiesced to and
subsequently defended the inflated and manipulated valuation (see page 316 of
the Report).
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40.4. The Ayo transaction showed “ a marked disregard for PIC policy and standard
operating procedure ”. Corporate governance was absent or poor. Th e close
relationship between Dr Matjila and Dr Survé created “topdown pressures” which
materially contributed to the conclusion of the deal (see page 317 of the Report).
From the PIC’s perspective, there is “a concentration of risk in one group, the
Sekunjalo Group, and one man, Dr Surve, with no evaluation of group exposure
in any scoping or appraisal documentation pertaining to the above four
transaction, having taken place”.
40.5. Several transactions utilising Ayo’s ABSA account were possibly irregular and/or
unlawful. This included the transactions through which the PIC paid the R4,3
billion subscription price for Ayo shares under private placement.
40.6. The Sekunjalo group of companies — including Premier Fishing — were remiss
in their obligations to repay their debt to the PIC. Nonetheless, the PIC continued
to loan money and invest in the companies in the sum of R1,5 billion.
40.7. According to Dr Abel Sithole, the GEPF’s CEO, the PIC made material
misrepresentations to the GEPF about the feasibility of the Ayo transaction.
40.8. The companies within the Sekunjalo Group are closely aligned and related. Many
of the board members of the different companies are related or affiliated to Dr
Survé.
[41] After evaluating the evidence, the Mpati Commission concluded that:
“The Ayo transaction demonstrates the malfeasance of the Sekunjalo Group,
the impropriety of the process and practice of the PIC as well as the gross
negligence of both the CEO and CFO.”
Other controversies
[42] In January 2020, it was reported that Ayo and AEEI had failed to file audited financial
statements for the year ended August 2019, despite the JSE's rules which state that
companies must submit audited accounts within four months of their financial year-end
companies must submit audited accounts within four months of their financial year-end
so that investors can draw timely conclusions about their prospects and performances.
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It was also reported that audit firm, BDO, had severed ties with Ayo and AEEI and all
other companies in the Sekunjalo Group.
[43] In August 2020, it was further reported that the JSE had fined Ayo R6.5 million for errors
in its 2018 interim results. It was said at the time that these errors stemmed from the
group's failure to “ subject the 2018 interim accounts and underlying documents to a
critical and thorough review".
[44] The African News Agency (which is part of the Sekunjalo Group) has also been accused
of accepting payments from the State Security Agency in exchange for publishing
positive news stories on former President Jacob Zuma and the State Security Agency.
[45] In January 2021, Dr Sydney Mufamadi, the chair of the High-Level Review Panel on the
State Security Agency, testified before the Zondo State Capture Commission that he
had received evidence that the State Security Agency had paid the African New s
Agency (a member of the Sekunjalo Group) R20 million in or around 2015 and 2016 for
“services rendered”, as part of a media project aimed at “countering negative local and
international perceptions of the country, [former President Jacob] Zuma and the SSA
(State Security Agency)”.
[46] In January 2022, it was reported that the JSE had publicly censured AEEI over a multi-
million rand share deal with SAAB Grintek Defence. According to the JSE, AEEI should
have put this call option to its shareholders for approval in May 2015 in line with listing
requirements but had failed to do so.
[47] The Respondent Banks argue that they took note of the above allegations.
[48] While continuing to provide products and services , some of the Respondent Banks
posed questions to the Applicants and carried out reviews of their bank client relations
in order to assess whether or not to continue with the relationship.
[49] After consideration of the Mpati Commission report and other matters, the Respondent
[49] After consideration of the Mpati Commission report and other matters, the Respondent
Banks (save for inter alia Nedbank and Standard Bank at the time of hearing) closed
the respective accounts, and/or have declined to open new bank accounts, having
found that the bank-customer relationship with customers in the Sekunjalo Group posed
intolerable reputational, commercial, and legal risks vis-à-vis:
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49.1. The regulatory framework in which the banks operate;
49.2. The protocols they employ to comply with its risk-management obligations;
49.3. The fact that negative publicity concerning the Sekunjalo Group continued to
proliferate, as evidenced by many articles published by major South African news
organisations;
49.4. The extremely serious allegations and recommendations set out in the Mpati
report — against the entire Sekunjalo Group and Doctors Survé and Matji la
personally — and the further negative publicity that the Mpati report engendered;
49.5. The fact that sponsors PSG Capital, lawyers Webber Wentzel, and auditors BDO
had all terminated their relationships with Sekunjalo companies; and
49.6. The fact that the JSE i mposed a R6,5 million fine on Ayo for making material
errors in its 2018 unaudited interim results.
[50] The Respondent Banks further argue that the fact that several of the banks decided to
close their accounts with the Sekunjalo Group of companies and/or have declined to
open new accounts is not surprising or suspicious. Th ey state that the Respondent
Banks have materially the same legal and risk management obligations. And because
of th ese obligations, t hey would have each independently come to the reasoned
conclusion that it would be intolerable for them to remain a banker of the Sekunjalo
Group.
The Applicants’ perspectives on the closure of accounts
[51] The Applicants strongly dispute the veracity of the events leading to the closure of their
accounts and/or the reasoning for the banks’ reliance on these events to terminate the
bank-customer relationship with them.
The Mpati Commission Report
[52] The Applicants argue that the President did not establish the Mpati Commission of
Inquiry to investigate the Sekunjalo Group. The President appointed the Mpati
Commission of Inquiry into allegations of impropriety regarding the PIC.
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[53] The Applicants state that Mpati Commission report at paragraph 45 provided that the
Premier Fishing “transaction was merely included for the sake of completeness of the
transactions that the PIC undertook within the Sekunjalo Group.” Quite clearly, Premier
Fishing fell outside the terms of reference of the Mpati Commission.
[54] The Applicants state that Mpati Commission report recommended, inter alia, to the PIC
Board to review all aspects of the transactions entered into with the Sekunjalo Group to
determine whether any laws or regulations have been broken. It further recommended
to the regulatory and other authorities to consider whether any laws and/or regulations
have been broken by either the PIC and/or the Sekunjalo Group.
[55] The Applicants state that at most the Mpati Commission report focused on two
investments that the PIC made in entities associated with the Sekunjalo Group. The
Applicants aver that the recommendations for further investigation in respect of two
investments by the PIC do not grant the Respondent Banks carte blanche to cease
providing banking and payment services to all the Applicants.
[56] The Applicants further argue that whilst the Mpati Commission report made findings
against the PIC, eight of the Respondent Banks are still associated with the PIC as a
substantial shareholder and that the bank accounts of the PIC have not been closed by
the Respondent Banks who bank the PIC.
[57] The Applicants state that if the Respondent Banks were serious about the alleged
reputational risk, they would have closed the bank accounts of the PIC and
disassociated with it a while ago.
[58] The Applicants say that t here are no adverse findings by the Mpati Commission in its
report against the Sekunjal o Group or any entity within or associated with the Group.
That is why the report recommended an investigation on specific issues by the PIC and
regulatory authorities as identified in the report.
regulatory authorities as identified in the report.
[59] The Applicants argue that not a single Respondent Bank has identified any transaction
which is irregular or illegal or involves money laundering.
[60] The Applicants also argue that whilst some of the Respondent Banks mention reporting
transactions to the FICA, at no stage do they seek clarity from any of the group
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companies in relation to these so -called reported transactions. In fact , they continued
to bank the companies that they note in their answering affidavit for many y ears after
the so-called FICA report. Had there been something irregular in these transactions,
they or the FICA were duty bound to contact law enforcement authorities.
[61] Furthermore, they argue that the Respondent Banks use the articles by competitors of
Sekunjalo owned by Independent Media as proof of wrongdoing and as causing
reputational risk.
[62] The Applicants also allege that the Respondent Banks’ own conduct demonstrates
massive reputational risk. In recent times, they have all been implicated in Rand fixing
allegations by the Commission.
[63] They also argue that the Respondents’ reasoning of reputational risk is fatally flawed
when you consider that at least 20 companies involved in at least R200 billion of
corruption such as the likes of Steinhoff, EOH, Tongaat, ABB, Glencore and many
others are still clients of these Respondent Banks. Not only do they provide
transactional accounts, but they also provide lending facilities to the likes of Glencore
and others. In contrast, some of the Respondent Banks having terminated the Sekunjalo
Group accounts, which have not been proven to be involved in any fraud and corruption.
[64] The Applicants also submit that as a result of the many questions and concerns raised,
they engaged a highly experienced team of Senior Counsel to review the Mpati
Commission report and findings which will give comfort to the banks and also
demonstrate the integrity and good governance of the Sekunjalo Group.2
The Commission’s submission
[65] The Commission filed a submission in which it essentially confirmed that it was seized
with the investigation of the complaint.
[66] It furthermore requested the Tribunal not to make definitive findings in the context of
this interim relief case in relation to the concept of collective dominance, the
this interim relief case in relation to the concept of collective dominance, the
characterisation of the issue in dispute as a contractual issue; and the characterisation
2 At the time of this hearing, the factual findings of the report had not yet been made public. However, it appears
in news articles, subsequently, that Judge Willem Heath has cleared the Sekunjalo Group of any wrongdoing. It
has also been reported that the Sekunjalo Group has now approached the Western Cape High Court to formally
review and ultimately set aside the Mpati Commission report.
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of a “group boycott”. In relation to the latter the Commission submitted that the concept
of a group boycott, as developed by the US authorities, is replete with nuance and this
may necessarily require that each conduct which may be viewed as constituting a group
boycott be examined on a case-by-case basis.
Legal context: Interim Relief Applications
[67] The adjudication of interim relief applications is circumscribed in section 49C(2)(b) of
the Act, which reads:
“Interim Relief … The Competition Tribunal … may grant an interim order if it
is reasonable and just to do so, having regard to the following factors:
(i) the evidence relating to the alleged prohibited practice;
(ii) the need to prevent serious or irreparable dam age to the
applicant; and
(iii) the balance of convenience.”
[68] There are three steps in this process. Upon establishing whether an applicant has a
prima facie right to the interim relief being sought, we must also consider two other
ancillary factors namely, (i) serious or irreparable harm, and (ii) balance of convenience.
[69] In Nedschroef,3 the Tribunal held as follows:
“[23] The Tribunal has previously observed in National Wholesale Chemists
(Pty) Ltd and Astral Pharmaceuticals (Pty) Ltd et al, (a case considered shortly
after the Act was amended to provide for the present section 49), that: “…,In
terms of section 49C(2), the Tribunal no longer has to consider whether each
of the requirements has been established in isolation, but rather looks at all the
factors listed in section 49C(2) as a whole to see whether a case for interim
relief has been established. This feature of section 49C(2) distinguishes it from
the old section 59 where interim relief could only be granted where each of the
listed requirements had been satisfied. Section 49C(2) follows the approach at
common law as applied by Appellate Division in the case of Eriksen Motors
(Welkom) Ltd v Protea Motors, Warrenton 1973 (3) 685 (A). The court held that
(Welkom) Ltd v Protea Motors, Warrenton 1973 (3) 685 (A). The court held that
3 Nedschroef Johannesburg (Pty) Ltd and Teamcor Ltd and Others Case No: 95/IR/Oct05.
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in deciding whether to exercise its discretion to grant interim relief the court
should not look at the prerequisites in isolation but should consider all of them
in conjunction with each other. The court went on to state that these
prerequisites “…are not individually decisive, but are interrelated, for example,
the stronger the applicant’s prospects for success the less the need to rely on
prejudice to himself. Conversely, the more the element of “some doubt” the
greater the need for the other factors to favour him.”
[24] Therefore, what the Tribunal found in NWC is that although the sections
may appear similar, in terms of language used and the nature of the factors to
be considered, there has been a decisive shift in the way it is to be applied.
The old section required proof of each of the various constituents; the new
starts off by making the threshold requirement that the granting of the order is
‘reasonable and just’ and then requires that the Tribunal ‘has regard’ to the
constituent factors, not as separate building blocks, but rather as a collective
set of criteria that can be weighed and balanced through the lens of what is
“reasonable and just”.
[25] The implication of this shift, is that an application may meet the three
factors, but there may be reasons why granting the application is not
reasonable and just. Conversely, an applicant may not make out a strong case
on all three of the factors, but t he Tribunal may nevertheless consider that an
order for interim relief is nevertheless reasonable and just following and Eriksen
type approach”4 (emphasis added).
[70] The three steps must be understood holistically with each factor balanced against the
other.5
“Section 49C confers a discretion on the Tribunal to grant interim relief having
regard to what is reasonable and just in the circumstances. The three legs of
the inquiry are however considered holistically. Thus, a weak case on say
irreparable ha rm may be counterweighted by a very strong case on the
irreparable ha rm may be counterweighted by a very strong case on the
4 Nedschroef at paras 23-25.
5 Natal Wholesale Chemists (Pty) Ltd and Astra Pharmaceuticals (Pty) Ltd (98/IR/Dec00) [2001–2002] CPLR 363
(CT); York Timbers Limited v South African Forestry Company Limited (15/IR/Feb01) [2001] ZACT 19 (9 May 2001)
at para 13; Anchor Zedo Outdoor CC v Passenger Rail Agency of South Africa (017616) [2013] 2 CPLR 496 (CT)
at para 16; GovChat (Pty) Ltd and Hashtag Letstalk (Pty) Ltd v Facebook, Inc and Others (IR165Nov20) at para
19.
18
prohibited conduct. And vice versa, a weak case on prohibited conduct may be
counterweighted by a strong case on irreparable harm.”6
[71] The factors listed in section 49C(2)(b) of the Act therefore are not a list of prerequisites
for the granting of interim relief. The three factors should be weighed against each other
to determine what is ‘reasonable and just’.
[72] This accords with our approach to interim relief applications as set out in York Timbers:
“Applying this analysis to our Act means that we must first establish if there is
evidence of a prohibited practice, which is the Act’s analogue of a prima facie
right. We do this by taking the facts alleged by the applicant, together with the
facts alleged by the respondent that the applicant cannot dispute, and consider
whether having regard to the inherent probabilities, the applicant should on
those facts establish the existence of a prohibited practice at the hearing of the
complaint referral.
If the applicant has succeeded in doing so, we can then consider the “doubt”
leg of the enquiry. Do the facts set out by the respondent in contradiction of the
applicants case raise serious doubt or do they constitute mere contradiction or
an unconvincing explanation. If they do raise serious doubt the applicant
cannot succeed.
As far as the remaining factors in section 49C(2) are concerned viz, irreparable
damage and the balance of convenience, these are not looked at in isolation
or separately but are taken in conjunction with one another when we determine
our overall discretion.”7
[73] It is not our function, in interim relief proceedings, to arrive at a definitive findi ng of a
contravention. A successful applicant is only required to make out a prima facie case,
not to establish its case on a balance of probabilities. In this way interim relief
applications under section 49C are analogous to interim interdict applications in the
High Court, where applicants seek relief pending the determination of some othe r
High Court, where applicants seek relief pending the determination of some othe r
6 GovChat (Pty) Ltd and Hashtag Letstalk (Pty) Ltd v Facebook, Inc and Others (IR165Nov20) at para 160.
7 York Timbers Limited v South African Forestry Company Limited (15/IR/Feb01) [2001] ZACT 19 (9 May 2001) at
paras 64 – 66.
19
dispute. In this instance the Applicants seek interim relief pending the outcome of the
Commission’s investigation into their complaint.8
[74] The approach to interim relief applications has evolved through the CAC’s judgements
in Business Connexion9 and eMedia.10
[75] In this respect Business Connexion (relied upon in the CAC’s eMedia judgement)
states:
“Unlike disputes in private law which, for the most part, concern the rights
enjoyed and duties owed by individuals to one another, prohibited practices in
chapter 2 concern the conduct of firms and their effect on competition in the
market. Even those practices that are not defined by reference to their effects
are nevertheless rendered unlawful by reason of their presumptive harmful
effects upon competition. As a result, interim relief granted by the Tribunal has
effects upon the state of competition in the market. Second, when the Tribunal
grants an interim relief order, it is not a status quo order. The order requires
that the respondent firm desist from the prohibited practice (in whole or in part).
The purpose of the order is to alter the competitive relationship between firms
in the market. If the interim order is to be effective, it is intended to permit of
competition taking place in the market that has hitherto not taken place. That
may have effects within a market or across markets, and may affect different
market participants: customers, competitors and suppliers. When the Tribunal
grants an interim order it alters the status quo in the market and is intended to
change the way firms compete in the market, with consequences that may well
resonate within and between markets.
An interim relief order under the Act does not provide a remedy to permit a
person claiming a right to enjoy the exercise of that right until the right is finally
determined. Rather, the Tribunal is empowered to regulate how competition in
the market is to take place for a six- or twelve-month period. That is a different
the market is to take place for a six- or twelve-month period. That is a different
competence to that of a court adjudica ting a dispute of right; it is a regulatory
competence to decide whether the state of competition in the market must
8 GovChat (Pty) Ltd and Hashtag Letstalk (Pty) Ltd v Facebook, Inc and Others (IR165Nov20) at para 20.
9 Business Connexion (Pty) Ltd. v Vexall (Pty) Ltd. and another, Case Number: 182/CAC/Mar20.
10 eMedia Investments (Pty) Ltd SA v Multichoice (Pty) Ltd and Another (201/CAC/Jun22).
20
endure, notwithstanding the evidence that a prohibited practice is taking place,
or whether the Tribunal should order a change.”11
[76] The CAC in eMedia further developed the jurisprudence with regard to interim relief. It
found that the basis of the power to grant interim relief must also be contextualised
within the jurisprudential framework of the Act and that the preamble to the Act i n
defines:
“the aim and object of competition law. It recognises that apartheid and other
discriminatory laws and practices of the past resulted in excessive
concentrations of ownership and control within the national economy,
inadequate restraints again st anti -competitive trade practices, and unjust
restrictions on full and free participation in the economy by all South Africans.
That the economy must be open to greater ownership by a greater number of
South Africans.”12
[77] The purpose of the Act is defined as promoting and maintaining competition in order-
“(a) to promote the efficiency, adaptability and development of the economy;
(b) to provide consumers with competitive prices and product choices;
…
(e) to ensure that small and medium -sized enterprises have an equitable
opportunity to participate in the economy; and
(f) to promote a greater spread of ownership, in particular to increase the
ownership stakes of historically disadvantaged persons.”13
[78] The CAC in eMedia then held that it must follow that these are the guidelines to be
followed when applying the provisions of the Act. The approach calls for a
transformative constitutional approach and must be consistent with the scheme of the
Act and apply a context-sensitive approach.
[79] It follows therefore that in granting or refusing interim r elief or indeed any relief the
jurisprudential and transformative context of the Act must be considered.
11 Business Connexion at paras 17 – 18.
12eMedia at para 82.
13 eMedia at para 83.
21
[80] The CAC in eMedia also affirms the approach to competition jurisprudence as set out
in the case of Mediclinic where the Constitutional Court held:
“[3] It ought never to be acceptable for any of us, including the corporate
citizens of this land, to indulge, talk less of over-indulge, in the unconscionable
practice of seeking to record the highest profit margin possible by any means
necessary, in wanton disregard for what that would do to the rest of humanity.
Neither should the historic exclusion of some from meaningful participation,
particularly in the mainstream economy, be normalised. For, this seems to be
one of the most stubborn injustices of o ur past that require a more deliberate,
intentional and systematic confrontation appropriately enabled by independent,
incorruptible, efficient and effective law enforcement and justice -dispensing
institutions.”
“[7] Institutions created to breathe life into these critical provisions of the Act
must therefore never allow what the Act exists to undo and to do, to somehow
elude them in their decision -making process. The equalisation and
enhancement of opportunities to enter the mainstream economic space, to stay
there and operate in an environment that permits the previously excluded as
well as small and medium-sized enterprises to survive, succeed and compete
freely or favourably must always be allowed to enjoy their pre -ordained and
necessary pre-eminence. The legitimisation through legal sophistry or some
right-sounding and yet effectively inhibitive jurisprudential innovations must be
vigilantly guarded against and deliberately flushed out of our justice and
economic system.”14
[81] In keeping with these principles, the CAC in eMedia then stated:
“This really means that the Tribunal must make a summary assessment before
granting the interim relief. This assessment is only at a prima face level. It must
consider the evidence as to the alleged practice. There is usually no time to
consider the evidence as to the alleged practice. There is usually no time to
delve too deeply in serious or irreparable harm but at the very least it must be
assessed in the context of whether there is a prima facie right at the interim
level. As long as there is clear and non -speculative evidence about possible
14 Competition Commission of South Africa v Mediclinic Southern Africa (Pty) Ltd and Another (CCT 31/20) [2021]
ZACC 35 (15 October 2021) (“Mediclinic”) at paras 3 and 7.
22
anti-competitive effects, then serious consideration must be given to the grant
of the relief. In addition, the proper consideration of the balance of convenience
applied to the facts also provides further checks and balances to ensure an
equitable result.”15 (emphasis added)
[82] The CAC in eMedia reiterated the principles for interim relief as follows:
“Section 49C (3) of the Competition Act equates the standard of proof as the
same standard as in High Court common law interim relief. The principles are
trite. If there is prima facie right, even one open to some doubt and a well -
grounded apprehension of irreparable harm if the relief is not granted and
ultimately granted at final relief stage, then the balance of convenience favours
the grant of the relief”.16 (emphasis added).
[83] In applying its mind , the CAC in eMedia found that non-speculative and objective
evidence strongly pointed to a prima facie right.
[84] In other words , eMedia has evolved the jurisprudence to include a constitutional and
transformative view of the provisions of the Act in considering interim relief applications.
It is clear that if there is a prima facie right (contravention) established with reference to
clear and non-speculative evidence; even where the establishment of that right is open
to some doubt, but there is a well-grounded apprehension of harm – the Tribunal must
find that it favours the granting of the interim relief application.
Is there prima facie evidence relating to the alleged prohibited practice under
section 4?
[85] Section 4(1)(a) prohibits agreements or concerted practices by firms in a horizontal
relationship that have the effect of substantially preventing or lessening competition in
the market, unless a party to the alleged agreement or concerted practice can show
procompetitive, efficiency or technological gains that outweigh the anti -competitive
effects. Such agreements are analysed under the rule of reason which permits
effects. Such agreements are analysed under the rule of reason which permits
procompetitive/efficiency justification.
15 eMedia at para 93.
16 eMedia at para 95.
23
[86] Section 4(1)(b) prohibits agreements or concerted practices by firms in a horizontal
relationship that rela te to specific types of conduct listed therein , namely direct or
indirect price fixing; market division (by allocating customers, suppliers, territories or
specific types of goods or services) or collusive tendering. Such agreements or
concerted practices are per se prohibited as they are presumed to be harmful to
competition and no justification is permitted.
[87] Section 1(ii) defines an agreement as “…a contract, arrangement or understanding,
whether or not legally enforceable” whereas section 1(vi) defines a concerted practice
as “ …co-operative or co -ordinated conduct between firms, achieved through direct
contact, that replaces their independent action, but which does not amount to an
agreement”.
[88] Section 4(2) provides as follows:
“(2) An agreement to engage in a restrictive horizontal practice referred to in
subsection (1)(b) is presumed to exist between two or more firms if-
(a) anyone of those firms owns a significant interest in the other, or they
have at least one director or substantial shareholder in common; and
(b) any combination of those firms engages in that restrictive horizontal
practice.”
[89] Section 4(2) of the Act gives rise to a presumption that an agreemen t exists between
two or more firms if they have a substantial shareholder in common and if any
combination of those firms engaged in a restrictive horizontal practice as described in
section 4(1)(b). It bears emphasis that the presumption applies to section 4(1)(b) per se
prohibitions and not to section 4(1)(a).
[90] The Applicants have brought the case under section 4(1)(a) and 4(1)(b) of the Act. For
both they rely on the timing and reasons for the closure of the bank accounts. They
further rely on the presumption under section 4(2) to infer an agreement under 4(1)(b)
and they allege that the closure of the bank accounts amounts to fixing a trading
and they allege that the closure of the bank accounts amounts to fixing a trading
condition in contravention of 4(1)(b)(i).
[91] Further, in reply and in argument, they relied on the banks’ membership in BASA to
infer an agreement under section 4(1)(b).
24
[92] The Applicants argue that:
92.1. There is an agreement between the Respondent Banks or a concerted practice
between the Respondent Banks to terminate or refuse to provide banking and
payment services to the Sekunjalo Group.
92.2. That section 4 properly interpreted includes a group boycott contravention . The
Respondent Banks allegedly have decided to group boycott the Applicants by
terminating or refusing to provide banking and payment services. Group boycott
in the context of this case means an agreement or a concerted practice by the
Respondent Banks , to terminate or refuse to provide banking and payment
services to t he Sekunjalo Group. In their Heads of Argument, the Applicants
submitted that the question before the Tribunal is whether a collective boycott as
alleged against the Respondents is prosecutable under section 4(1). However,
in oral argument, the Applicants submitted that it was not necessary for the
Tribunal to make this determination at interim relief stage.
The facts/evidence relied upon to prove an agreement or concerted practice under
section 4(1)(a) and 4(1)(b)
[93] The Applicants submit that the Tribunal may infer an agreement from the “wholesale
closure or restriction” of the Applicants’ accounts or limited banking and payment
services to the Applicants, and that the timing of the closures and the similarity of
reasons provided for the closures or limitation or refusal to provide services indicate a
contravention of section 4 of the Act.
[94] The Applicants go on to say that on the Respondents’ own version the termination of
the accounts was because of negative media reporting, the Mpati Commission report,
the PIC litigation regarding Ayo, and the Bredenkamp judgement of the SCA. Further,
the termination of bank accounts has happened systematically within a short period of
15 months from 26 November 2020 (in the case of Absa) to February 2022 (in the case
15 months from 26 November 2020 (in the case of Absa) to February 2022 (in the case
of Nedbank). The timing of the closures is illustrated by the table annexed hereto as
Annexure “A”.
25
[95] The Applicants further request that the Tribunal infer the requisite agreement from the
industry association membership and the role played by influential CEOs of the banks
at BASA. The board of BASA comprises the chief executive officers of ABSA, Standard
Bank, Nedbank, Investec and FirstRand. Sasfin and Capitec represent the second-tier
segment of the market.
[96] Furthermore, the Applicants submit that:
96.1. Between May and August 2021, Mercantile Bank declined to open bank accounts
for AEEI, Afrinat, Orleans, and Loot Online;17
96.2. On 12 November 2021, Sasfin declined to open an account for the Seventeenth
Applicant, Kathea Communications (Pty) Ltd; and
96.3. On 26 July 2021, Access Bank refused to engage with the Sekunjalo Group
regarding opening bank accounts.
[97] In response, t he Respondent Banks argue that the timeline of when the banks gave
notice or terminated the Applicants’ bank accounts proves nothing in relation to an
agreement or concerted practice since:
97.1. The Respondent Banks operate in a strict regulatory environment with the same
or substantially similar domestic and international obligations. The Respondent
Banks would therefore have similar risk-management policies; and
97.2. The information that most likely informed the termination by the various
Respondent Banks would have become known to the Respondent Banks at the
same or similar times, where that arose from external sources, but some of the
Respondent Banks may have acted sooner or later due to the activities of the
Applicants within that particular bank or due to the nuances of the particular risk-
strategy of each bank.
17 AEEI had a working capital facility with the Seventh Respondent, Investec. This facility was settled by AEEI in
2020 and then closed. The notice of termination regarding AEEI’s accounts came from Investec Securities (Pty)
Ltd (”Investec Securities”). AEEI’s relationship is w ith Investec Securities and not Investec, the Seventh
Respondent cited in this matter. Due to the non -citation of Investec Securities as a respondent in these
proceedings, it follows that AEEI’s account with Investec Securities cannot form the subject matt er of this interim
relief application as it is not covered by the relief sought.
26
[98] The Respondent Banks counter the argument regarding BASA membership by simply
stating that there is no basis at all to infer from the Respondent Banks’ membership of
BASA that an agreement in contravention of section 4 was struck there.
[99] In addition, the Respondent Banks argue that the Applicants’ complaint to the
Commission does not allege that there was a group boycott in contravention of section
4(1)(a) and it is impermissible for the Applicants to seek interim relief on the basis of a
complaint that has not been made to the Commission.
Facts/evidence relied upon for the presumption of a n agreement (section 4(1)(b)
contravention due to common shareholding - section 4(2))
[100] The Applicants submit that because the Respondent Bank s have a substantial
shareholder in common, this gives rise to a presumption of an agreement in terms of
section 4(2) of the Act. The Applicants submit that the PIC owns 10.4% of Nedbank,
14.2% of Standard Bank, 14.7% of FirstRand, 6.24% of ABSA Bank, 13% of
Capitec/Mercantile, 12% of Investec Bank, and 19.52% of Bidvest.
[101] In response, Sasfin states that the PIC does not have any shares in it, and even if it did,
they are insignificant. Access Bank admits that the PIC holds an indirect shareholding
in Access Bank through one of Access Bank’s shareholders but denies that this gives
cause to presume th at Access Bank has engaged in conduct involving the other
Respondent Banks in contravention of section 4(1)(b) of the Act.
[102] Simply put, the Applicants’ case is that by operation of the presumption in section 4(2),
the conduct of the banks in closing or limiting the Applicants’ bank accounts or in the
case of banks that refused to open new bank accounts, falls squarely within the
prohibition set out in section 4(1)(b) o f the Act, namely, directly or indirectly fixing a
trading condition and/or dividing markets by allocating customers. The trading condition
is that all of them ultimately refuse to bank the Applicants.
is that all of them ultimately refuse to bank the Applicants.
[103] The Respondent Banks note that the section 4(2) presumption may be rebutted if the
practice (in this case the alleged closure of the accounts) is a normal commercial
response to conditions prevailing in that market. However, in this case they state that
they have not entered into an agreement or engaged in a concerted practice with any
27
of their competitors in relation to the provision of payment and banking services to the
Sekunjalo Group. Therefore, the presumption does not arise.
[104] Again, the Respondent Banks’ counter argument is simply that there is no basis at all
to infer that there is an agreement or concerted practice agreed upon by the
Respondent Banks to boycott the Applicants.
Our assessment: context
[105] At the outset, the Applicants framed their case on Mediclinic as the guiding
jurisprudence in determining whether the conduct of the Respondent Banks has anti-
competitive effects. The Applicants submit that, in Mediclinic, the Constitutional Court
warned institutions such as this Tribunal never to allow what the Act exists to undo and
to do, to somehow elude it in its decision -making process. They relied on the above
cited passage (see paragraph 80) from the Constitutional Court judgement in Mediclinic,
which the CAC also relied on in eMedia to emphasise the transformative goals of the
Act, particularly those concerned with black-owned companies and giving opportunities
to them to enter and participate in the mainstream economy.
[106] As reiterated by the CAC the case must be considered with due regard to context and
South Africa’s history, as the Act requires us to do. One of the striking features of
apartheid was racial exclusion. But another, which is as pernicious as racial exclusion
was economic exclusion. Economic exclusion persists in South Africa today, and it is
for that reason that the Act also aims to address the legacy of economic exclusion and
its premise is economic inclusion. Furthermore, the realization of equality is the core
and foundational value of our Constitution. Whilst economic exclusion persists it is not
possible to achieve equality.
[107] The Preamble of the Act recognizes that apartheid and other discriminatory laws and
practices of the past have resulted in unjust restrictions on full and free participation in
practices of the past have resulted in unjust restrictions on full and free participation in
the economy by all South Africans. The high levels of economic concentration (which
produce and replicate economic exclusion through practices like abuse of dominance),
were also recognised in the explanatory memorandum that accompanied the
Competition Act Amendment Bill in 2017.
28
[108] It is the Applicants position that their application for interim relief falls squarely within
the Constitutional imperatives of the Act, in particular its objectives and purpose under
Section 2.
[109] Section 2 of the Act states its purpose as being (i) to promote employment and advance
the social and economic welfare of South Africans, (ii) to expand opportunities for South
African participation in world markets and recognize the role of foreign competition in
South Africa, and (iii) to promote a greater spread of ownership, in particular to increase
the ownership stakes of historically disadvantaged persons.
[110] The Commission, in its Banking Enquiry Report found that:
“Without a bank account and access to payment services, it would be difficult if
not impossible for an individual to participate effectively in any modern economy.
Today, a bank account is usually required in the formal economy in order to
receive wages and Salaries, make a wide variety or routine payments, and
access Savings and credit facilities. There are currently no real alternatives for
individuals and business that want to participate in the formal economy... credit
facilities including home loans are generally only available to those able to
service the debt via transaction account.”18
[111] Banking plays a central role in the economic life of society. The Banking Enquiry Report
found that South African retail banks operate as a tightly knit oligopoly and have
traditionally managed to take advantage of this market structure by avoiding obvious
price competition and that the barriers to entry are high. The Banking Enquiry Report
attributed this mainly to cost structures (high fixed and common costs) that encourage
or indeed require banks to achieve large scale economies; and barriers to entry, which
have virtually eliminated the threat of entry. The Banking Enquiry Report argued further
that banks have built on these advantages by ensuring that product differentiation and
that banks have built on these advantages by ensuring that product differentiation and
pricing complexity are both high; large information gaps and asymmetries pr evail; and
customer switching is very low.
[112] The assessment below relates to the Respondent Banks who have closed bank
accounts to the Sekunjalo Group or have indicated their intention to do so.
18 Commission’s Banking Market Enquiry Report, Chapter 2, para 2.1.2.
29
[113] Given the similarities in the arguments raised by the Respondent Banks, we have dealt
with them together rather than individually with each bank’s response. Where there are
unique issues specific to a particular bank, we indicate this and deal with those specific
issues.
Our assessment of section 4
[114] Again, we repeat that in order to make out an interim relief case under section 4(1) the
Applicants must prima facie show that there was either an agreement or a concerted
practice in place between the Respondent Banks.
[115] The CAC, in Netstar19 provided that an agreement arises from:
“the actions of or discussions among the parties directed at an arrangement that
will bind them either contractually or by virtue of moral suasion or commercial
interest. It may be a contract, which is legally bind ing, or an arrangement or
understanding that is not, but which the parties regard as binding upon them. Its
essence is that the parties have some kind of consensus”20
[116] The CAC in Netstar, further held that in many cases the same evidence may be relied
upon to prove an agreement and to prove a concerted practice .21 But also cautioned
that even where reliance is placed on the same evidence in support of these distinct
cases it requires separate evaluation.22
[117] The Applicants rely on the same evidence for both.
[118] We next consider if one can in this case infer an agreement between the Respondent
Banks.
[119] We were not persuaded that the Applicants have discharged the onus to show an
agreement under section 4(1)(b).
19 Netstar (Pty) Ltd v Competition Commission South Africa and Another 2011 (3) SA 171 (CAC
20 Netstar at para 25.
21 Netstar at para 25.
22 Netstar at para 26.
30
[120] This is because in order to rely on an inference, the Tribunal, in Thembekile Maritime
Services23 following the approach set out in De Lacy24 by the Supreme Court of Appeal
has established that:
120.1. The process of inferential reasoning calls for an evaluation of all the evidence
and not merely selected parts;
120.2. The inference that is sought to be drawn must be consistent with all the proven
facts. If it is not, then the inference cannot be drawn; and
120.3. The proved facts should be such as to render the inference sought to be drawn
more probable than any other reasonable inference, if they allow for another
more or equally probable inference, the inference sought to be drawn cannot
prevail.25
[121] This approach was recently reiterated by the CAC in Aranda26 which stated that when
considering a matter via inference or circumstance to prove a contravention of the Act,
that:
“The process of inferential reasoning calls for an evaluation of all the evidence
and not merely selected parts. The inference that is sought to be drawn must be
consistent with all the proven facts. If it is not, then the inference cannot be
drawn or it must be the a 'more natural, or plausible, conclusion from amongst
several conceivable ones when measured against the probabilities’”.27
[122] In respect of the timing of and reasons for the closures, we cannot infer an agreement
from this alone without more. The mere fact that the Respondent Banks closed their
Sekunjalo Group clients’ accounts for similar reasons, does not establish a prima facie
case that the Respondent Banks reached an agreement in closing the Applicants’
accounts in a manner prohibited by section 4(1)(b) of the Act.
23 Competition Commission v Thembekile Maritime Services and Others CR067May17.
24 South African Post Office v De Lacy & another [2009] ZASCA 45; 2009 (5) SA 255 (SCA).
25 De Lacy at para 35.
25 De Lacy at para 35.
26 Aranda Textile Mills (Pty) Ltd and Another v The Competition Commission (190/CAC/Dec20) [2021] ZACAC 1
(17 December 2021).
27 Aranda Textile Mills at para 39.
31
[123] In respect of the Respondent Banks’ membership of BASA, the Applicants merely allege
that they ‘surmised’ that the decision taken to close the Sekunjalo Group accounts was
taken at a BASA sub -committee meeting without any evidence for example of when
meetings were held, who attended or what was discussed.
[124] The prima facie inference that we are asked to draw regarding an agreement to fix a
trading condition through the membership to BASA is in our view not adequately
substantiated in the absence of any further evidence.
[125] Further, we cannot prima facie infer an agreement by the Respondent Banks under
section 4(2) by virtue of the PIC’s common shareholding in certain of the Respondent
Banks. The Applicants sought to bolster the lack of evidence of an agreement under
section 4(1)(b) through the presumption. However, there is no evidence that the PIC
has any direct interest in two of the banks – Sasfin and Access Bank - and therefore
the presumption cannot apply in respect of Sasfin and Access Bank. 28 Insofar as the
PIC has shareholding in the remainder of the Respondent Banks, this shareholding is
non-controlling. There is no evidence that the PIC’s shareholding is sufficiently
significant to enable it to materially influence the decisions of the Respondent Banks.
For example, the Applicants put forward no evidence regarding the PIC’s position on
the boards of the Respondent Banks to determine if the PIC could potentially have
influenced, through its shareholding, the Respondent Banks’ decision to close the
Sekunjalo Group bank accounts but relied simply on the presumption without more.
[126] The Applicants conceded this during the hearing:
“MR NGALWANA SC: No, Chair, thank you, Chair. No, we’re not saying that
PIC controls the bank. We’re saying; there is a presumption in section 4(2) of
the Act that it is presumed that an agreement to engage in prohibited horizontal
practices is presumed if the firms involved have a substantial shareholder in
practices is presumed if the firms involved have a substantial shareholder in
common. We don't take it any further than that, we leave it at that point. So,
we’re not saying the PIC controls the banks.”29
[127] Insofar as the Applicants claim that the Respondent Banks’ conduct is by agreement to
directly or indirectly fix a trading condition in contravention of section 4(1)(b), we find
28 On the evidence lead before the Tribunal it was confirmed that the 14% shareholding of the PIC was not sufficient
for the PIC to have board representation at Standard Bank. See Transcript, page 120, lines 3 to 7.
29 Transcript, page 64, lines 8 – 15.
32
that the Applicants do not make out a case since there is no prima facie evidence to
show that the closure of the bank accounts would have an y effect on price -quality-
quantity being the elements of a trading condition, as found by the Tribunal i n
Patensie.30
[128] We next consider a concerted practice under section 4(1)(a).
[129] As stated above, t he Act defines “concerted practice” 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”.
[130] A concerted practice may inter alia arise out of coordination which becomes evident
from the conduct of firms in a horizontal relationship outside of an agreement. The CAC
in Netstar held that a concerted practice “examines the conduct of the parties to
determine whether it is coordinated conduct or if they are acting in concert. The absence
of an arrangement between them or any belief that they are obliged to act in that fashion
does not have an effect. A concerted practice is based on evidence that assesses the
nature of the conduct of the firms said to be party to the practice . The absence of any
arrangement between them or any belief that they are obliged to act in that fashion is
immaterial.”31
[131] The concept that a concerted practice may be inferred from behaviour might seem to
suggest, at first glance, that interdependent oligopoly behaviour amounts to a concerted
practice. However, oligopoly behaviour does not establish a concerted practice unless,
given the nature of the market, the behaviour of the firms concerned cannot be
explained other than by concerted behaviour.32
[132] As indicated, the Applicants submit that a concerted practice relating to a group boycott
can be inferred from:
132.1. The closure or restriction of the accounts;
132.2. The timing of these decisions;
30 Competition Commission and Patensie Sitrus Beherend Beperk (37/CR/Jun01) at para 35.
30 Competition Commission and Patensie Sitrus Beherend Beperk (37/CR/Jun01) at para 35.
31 Netstar at para 25.
32 The CAC in Netstar stated that the case for a concerted practice is based on evidence that assesses the nature
of the conduct of the firms said to be party to the practice, at para 26.
33
132.3. The similarity of reasons given; and
132.4. The membership of the banks in BASA.
[133] In terms of the nature of the market, the Applicants have without challenge stated that
while there are 31 registered banks in South Africa under the supervision of the
Prudential Authority, Nedbank, Standard Bank, FirstRand, ABSA and Investec have a
combined share of about 90.1% in the provision of banking services in South Africa. 33
This points to an oligopoly market with fringe players. Further, the Applicants have
stated without challenge that the market has high barriers to entry, including significant
regulatory barriers.
[134] As discussed above, the Respondent Banks claim reputational risk as their justification
for the conduct.34 We considered this explanation (discussed more in detail below) and
found it inadequate.
[135] While parallel conduct is not by itself proof of a concerted practice (such proof can only
be uncovered through an investigation by the Commission), given the nature of the
banking services market – the undisputed evidence of high barriers to entry and
concentration – and the conduct of the banks, we find that the conduct complained of
does at a prima facie level establish a case of a concerted practice between firms. This
is because the Respondents, acting in concert, closed the bank accou nts one after
another without an adequate justificat ion. For this finding it is not necessary to show
that the Respondents agreed to this. As the CAC has found in regard to a concerted
practice: “The absence of any arrangement between them or any belief that they ar e
obliged to act in an agreement between them or any belief that they are obliged to act
in that fashion is immaterial.”35
[136] The label group boycott however can be used to describe a wide variety of business
relationships and conduct . A group boycott for example may involve a concerted
practice by competitors to protect their own turf and in this form the only reason is that
practice by competitors to protect their own turf and in this form the only reason is that
participants would like to be spared from unwelcome competition. This is not the case
33 The Applicants submit that the Prudential Authority in its 2020/21 Annual Report found that the banking sector
is dominated by the five largest banks which collectively hold 90.1%.
34 Similarity of conduct across banks can be compatible with oligopolistic behaviour; but tacit collusion may also
explain such parallelism.
35 Netstar at para 25.
34
that the Applicants have raised. The Applicants’ case relates to a concerted practice by
competitors involving a refusal to deal with the Applicants which they label as a “group
boycott”.
[137] In a concerted refusal to deal, which is the case at hand, the Respondent Banks, rather
than protecting their own market from entry or unwelcome forms of aggressiv e
competition, may through a concerted practice be seeking to impose terms they
concertedly favour on downstream customers, in this case the Applicants. 36 Doing this
does not keep anyone out of the Respondent Banks’ market, but the conduct may lead
to vertical exclusion (or foreclosure of downstream firms) and harm competition (as well
as hinder the ability of small firms or black owned firms to participate in markets).
Competitive harm may or may not arise from such a concerted refusal to deal, however
such actions, for example, may very well come under the scrutiny of section 4(1)(a).
Section 4(1)(a) requires us to consider whether the conduct ( a concerted practice by
firms in a horizontal relationship) has the effect of substantially lessening competition in
a market and to weigh this effect against any efficiency reasons for the conduct.
[138] As is widely accepted, horizontal restraints (agreements or concerted practices
involving competitors) that standardize terms can be problematic. If the terms (through
a concerted practice) insisted upon directly implicate price – the conduct can be
characterized as price fixing and can be vulnerable to section 4(1)(b).37 But if the terms
being standardized (again through a concerted practice) are far enough removed from
price, whether the concerted refusal to deal with a customer or supplier will lessen
competition turns on the market structure, and other factors.
[139] The conduct raised by the Applicants in this case as described, is more important to us
than the label of “group boycott”. If, on the basis of an analysis, a concerted practice by
than the label of “group boycott”. If, on the basis of an analysis, a concerted practice by
firms in a horizontal relationship relates to a refusal to deal with customers or suppliers
on nonprice terms (or terms not related to market allocation, or collusive tendering) in a
36 A variation of this conduct could arise if firms in a horizontal relationship, through a concerted practice or an
agreement seek to impose terms they favour on buyers or suppliers. For example, firms in a horizontal relationship
might agree or through a concerted practice to refuse to deal with a buyer except through a standard contract they
favour, without an arbitration clause. Again, such conduct would be assessed under section 4.
37 Consider an example in which the boycotting firms collectively (through a concerted practice or an agreement)
decide to refuse to sell to downstream buyers unless the buyers pay an agreed higher price. In this instance, the
target of the boycott is a customer. Such conduct can be labelled as a group boycott, the turning points for this may
be presence of evidence of express coercive demands, such as “meet our price or we will refuse to deal with you”
which can be understood as a means of enforcing a price fixing arrangement. On this fact pattern, this conduct will
attract the attention section 4(1)(b).
35
market occupied by the concerting competitors , or in vertically related upstream or
downstream markets such conduct may contravene section 4(1)(a) prohibition.
[140] The next relevant question is whether there is prima facie evidence that a concerted
practice by the Respondent Banks in this case, has the effect of substantially lessening
competition. This requires us to consider if there is prima facie evidence of exclusionary
vertical foreclosure or consumer harm.
[141] An “exclusionary act” is defined in section 1(c) of the Competition Amendment Act, 2018
to mean an act that impedes or prevents a firm from entering into, participating in or
expanding within a market. While section 1(h) defines “participate” as referring to the
ability of or opportunity for firms to sustain themselves in the market.
[142] Recall the Applicants’ case is that the Respondent Banks are, through a concerted
practice, refusing to deal with them and this has the effect of hindering their ability to
sustain themselves in the various markets that they operate in. Moreover, the Applicants
are unchallenged when they state that they are a black owned firm, and they employ
more than 8 500 workers with tens of thousands of dependents mostly from poor black
communities.
[143] There is no dispute on the fact that no commercial transaction of substance and scale
is possible without banking services. Our view is that the Applicants establish, on a
prima facie basis, that the conduct of the Respondent Banks has the effect of impeding
or preventing the Sekunjalo Group of companies from participating in or expanding
within their markets. In the markets in which the Sekunjalo Group of companies
participate, their exit (foreclosure) from those markets will result in a reduction in the
number of firms and this constitutes, prima facie, evidence of a substantial lessening of
competition or harm to competition in those markets.
competition or harm to competition in those markets.
[144] The main efficiency justification put forward by the Respondent Banks as discussed
above relates to reputational risk. The banking system is the bedrock of any modern
economy as it enables trading within and across borders. Reputation is therefore critical
for all the various stakeholders of the banks in order for them to have confidence in the
system and in the fact that their money is safe. Reputation also takes time to build, and
it provides a commercial advantage for firms in the market. Because of reputation risk,
it is not surprising that firms would want to put in place (either for themselves or as
36
regulatory requirement) reasonable risk mitigation strategies which are proportionate to
the risks identified.
[145] However, even on this defense, the Respondent Banks, on a prima facie basis, face a
serious conflict of interest . The undisputed evidence before us shows that the
Respondent Banks have a selective approach in closing bank accounts of the
disfavoured Sekunjalo Group of companies . The undisputed evidence before us
suggests that other favoured firms accused of conduct (or who have been found to have
engaged in conduct) which could be said to cause reputational risk , have not faced a
similar approach by the Respondent Banks. This suggests, prima facie, that the conduct
of the Respondent Banks is not designed to effectively attain the claimed efficiencies
and is not reasonably necessary for that purpose.
[146] In light of the above assessment of the available evidence before us , the Applicants
establish a prima face case of a prohibited horizontal restraint relating to a concerted
refusal to deal involving the Respondent Banks under section 4(1)(a). Given the CAC's
guidance in eMedia, w e decline to limit our asse ssment of the Applicants’ case to
section 4(1)(b) just because in their complaint to the Commission they associate the
group boycott allegation with only section 4(1)(b). What is important is the description
of the conduct by the Applicants. In this case the description of the conduct in the
complaint to the Commission, as well as the Applicants’ Founding Affidavit before us.
The description of the conduct is clear and sufficient for us to evaluate the horizontal
restraint alleged under a rule of reason assessment.
[147] The Constitutional Court in Senwes38 has held that the Tribunal was not precluded from
determining a complaint not covered by the referral. Although the Tribunal cannot
initiate a hearing, this does not mean that it cannot determine a complaint brought to its
initiate a hearing, this does not mean that it cannot determine a complaint brought to its
attention during the course of deciding a referral. 39 Further, the Court found that
“Confining a hearing to matters raised in a referral would undermine an inquisitorial
enquiry”.40 In Glaxo Wellcome (Pty) Ltd and others v National Association of
Pharmaceutical Wholesalers the CAC held that Section 49B focuses on a “prohibited
practice” and does not require a complainant to identify prohibited conduct with
38 Competition Commission of South Africa v Senwes Ltd (CCT 61/11) [2012] ZACC 6; 2012 (7) BCLR 667(CC)
(12 April 2012)
39 Senwes at para 48.
40 Senwes at para 50.
37
reference to various sections of the Act. A complainant is not required to pigeonhole the
conduct complained of with reference to particular sections of the Act.41
[148] To conclude, we find that the Applicants have established on a prima facie basis, a
concerted refusal to deal under section 4(1)(a)for reasons set out above, However, the
Applicants do not establish a prima facie case of a concerted practice under a section
4(1)(b) since the Applicants proffered no prima facie evidence to show that the closure
of the bank accounts would have an effect on any trading condition in terms of section
4(1)(b)(i), this being trading conditions that have an effect on price -quality-quantity as
contemplated in Patensie where the Tribunal considered the necessary elements to
prove a contravention of section 4(1)(b) by fixing a trading condition.42 We also did not
a find prima facie evidence of customer allocation.
Is there prima facie evidence relating to the alleged prohibited practice under
section 8?
[149] Section 8(1)(c) deals the abuse of dominance through general exclusionary acts. It
provides that it is prohibited for a dominant firm to engage in an exclusionary act – other
than a type of “named” exclusionary act listed in section 8(1)(d) – if the anti-competitive
effect of that act outweighs its technological, efficiency or other pro-competitive gain.
[150] An exclusionary act is defined as “an act that impedes or prevents a firm from entering
into, participating in or expanding within, a market”.43
[151] Under section 8(1)(d)(ii), a dominant firm may not engage in the exclusionary act of
refusing to supply scarce goods or services to competitors or customers when supplying
is economically feasible, unless the firm concerned can show technological, efficiency
or other pro-competitive gains that outweigh the anti-competitive effect of its act.
[152] Under section 8(1)(d)(iii), a dominant firm may not engage in the exclusionary act of
[152] Under section 8(1)(d)(iii), a dominant firm may not engage in the exclusionary act of
forcing a buyer to accept a condition unrelated to the object of a contract unless the firm
concerned can show technological, efficiency or other pro -competitive gains that
outweigh the anti-competitive effect of its act.
41 Glaxo Wellcome (Pty) Ltd and others v National Association of Pharmaceutical Wholesalers at para 15.
42 Patensie at para 35.
43 Section 1(1) of the Act.
38
[153] Both sections 8(1)(c) and 8(1)(d) require a showing of dominance. Section 7 defines
“Dominance” as:
“7 Dominant Firms
A firm is dominant in a market if-
(a) It has at least 45% of that market;
(b) It has at least 35%, but less than 45% of that market, unless it can
show that it does not have market power; or
(c) It has less than 35% of that market, but has market power.”
[154] Market power is defined in section 1(1) of the Act as the power of a firm to control prices,
to exclude competition or to behave to an appreciable extent independently of its
competitors, customers, or suppliers.
[155] The Tribunal ’s approach to section 8(1)(c) and 8(1)(d) is found in South African
Airways44, in which it stated that:
“In summary, we find that the Act sets out the following approach to exclusionary
practices. In the first place we examine whether the conduct in question is
exclusionary in nature. In terms of section 8(c) that would be conduct that fits
the definition in the Act for what constitutes an exclusionary act. In terms of 8(d)
it is conduct that meets the definitions set out in the sub -paragraphs of that
section. If the conduct meets the requirements of the definition, we then enquire
whether the exclusionary act has an anti-competitive effect. This question will
be answered in the affirmative if there is (i) evidence of actual harm to consumer
welfare or (ii) if the exclusionary act is substantial or significant in terms of its
effect in foreclosing the market to rivals. This latter conclusion is partly factual
and partly based on reasonable inferences drawn from proven facts. If the
answer to that question is yes, we conclude that the conduct will have an anti -
competitive effect. Whichever species of anti -competitive effect we have,
consumer welfare or likely foreclosure, we have evidence of a quantitative
nature and hence we can return to the scales with a concept capable of being
measured against the alleged efficiency gain.
measured against the alleged efficiency gain.
44 Competition Commission and South African Airways (Pty) Ltd (18/CR/Mar01) [2005] ZACT 50 (28 July 2005)
(“SAA”).
39
Thus far the onus of proof in terms of both sections is on the complainant. Here
the treatment of the onus in the two sections now diverges.
In terms of 8(c) we then consider whether the anti-competitive effect outweighs
any efficiency justification for the conduct. If it does we can find that there has
been an abuse of dominance. Here again the onus is on the complainant.
In terms of section 8(d) the burden of proof now shifts to the respondent who
must prove that the efficiency justification outweighs the anticompetitive effect.
If the respondent does not, then the conduct will be found to be an abuse.
It is now appropriate to answer our prior questions. An anti-competitive effect is
something different to an exclusionary act. This does not make the reference to
an exclusionary act somehow superfluous. It firstly signals that we are analysing
an exclusionary as opposed to an exploitative abuse. Because we know we are
dealing with an exclusionary as opposed to an exploitative abuse, it helps guide
our analysis of the alleged anti -competitive effects of the conduct. More
importantly, because some forms of exclusionary act are for the legislature more
commonly associated with egregious behaviour by dominant firms these are
signaled out for special mention, so that dominant firms are on their guard to be
especially careful when embarking on this form of market behaviour. Finally, we
would suggest that the use of the word has a “characterising” function. It signals
the legislature’s intention to view competitive harm as structural in na ture as
opposed to a test of abuse of dominance that is based solely on consumer
harm.”45
[156] What the South African Airways approach means in effect is that section 8(1) is a rule
of reason prohibition. This means that the conduct complained of will only be prohibited
if it has an anti -competitive effect. Under section 8(1)(c) an applicant must show the
if it has an anti -competitive effect. Under section 8(1)(c) an applicant must show the
elements of the exclusionary cond uct as well as the effects. However, under section
8(1)(d), the onus shifts to the respondent to demonstrate that the effects are outweighed
by pro-competitive gains.
45 SAA at paras 132 – 136.
40
[157] The Applicants in this case are therefore required to satisfy the critical elements of the
sections namely prima facie evidence of the dominance of the Respondent Banks and
that the conduct complained of has exclusionary effects. In terms of 8(1)(d)(ii) the onus
shifts on the Respondent Banks to show that pro-competitive gains outweigh the anti-
competitive effects. In terms of 8(1)(c) the Applicants have the onus of showing this.
We note that an assessment of a firm’s dominance is almost always done with reference
to the market within which it functions.
The Applicants’ submissions on dominance
[158] With regards to section 8, the Applicants allege that the Respondent Banks’ closure of
the bank accounts and/or their refusal to open new bank accounts constitute a refusal
to supply/deal under both sections 8(1)(d)(ii) and 8(1)(c).
[159] The Applicants allege that:
159.1. Although under section 7(a) and section 7(b), the Respondent Banks each have
less than the statutory dominance threshold in market shares of at least 45% or
at least 35% but less than 45%, they each possess market power.
159.2. Alternatively, the Respondent B anks collectively constitute a single firm for
purposes of this application or have collective dominance . This is because the
five largest banks collectively constitute about 90% of the market with second
and third tier banks collectively holding the balance of approximately 9%.46
Facts alleged/evidence of market power
[160] The Applicants rely on the following as evidence to illustrate that the Respondent Banks
have market power:
160.1. The Respondent Banks are individually dominant because they behaved
appreciably independently of the Applicants (as their customers).
160.1.1. The Respondent Banks are market participants in a market with
extremely high barriers to entry, evidenced inter alia by the SARB entry
46 Sekunjalo Heads of Argument at [8].
41
requirements. The banking sector is an oligopolist market and is highly
concentrated.
160.1.2. Entry barriers are widely considered the most important factor in
determining whether a firm’s ability to exercise market power is effectively
constrained. 47
160.1.3. Customers of the Respondent Banks do not have bargaining power to
undermine the exercise of mar ket power . This is evidenced by the
conduct of the Respondent Banks to terminate services in circumstances
where the Applicants are going to be left unbanked.
160.1.4. While the individual Respondent Banks do not meet the market share
thresholds under sections 7(a) and (b) for dominance , they meet the
dominance threshold under section 7 (c), i,e., less that 35% of the market
but has market power.
160.2. Alternatively, collectively as a firm the Respondents are dominant because their
market shares exceed 90%.
[161] In response, the Respondent Banks argue that the mere fact that the banks have closed
the Applicants’ accounts does not show that the banks can act independently of their
customers or competitors by, for instance, raising their prices or lowering the quality of
their services while retaining market share. This simply shows that the Respondent
Banks have closed the Applicants’ accounts in a series of unilateral decisions (or acting
independent of each other). Essentially that market power should not be assessed by
reference to the conduct of a firm to one of its customers rather it should be assessed
by reference to a group of customers.
[162] The Respondent Banks argue that assessing market power in relation to one customer
would lead to limitless liability if a firm could be said to have “market power” under
section 7(c) of the Act simply because the firm decided to end its relationship with a
particular customer in the ordinary course of managing its risks and relationships.
Are the Respondent Banks Dominant?
47 OECD “Policy Roundtables, Evidentiary Issues in Proving Dominance”, 2006 p 7.
42
[163] It is common cause that none of the Respondent Banks is dominant in term s of the
market share thresholds stipulated in the Act (at least 45% or at least 35% but less than
45%). The Applicants concede this. However, their submission is that the Respondent
Banks have market power defined as “the power of a firm to control prices, to exclude
competition or to behave independently of its of its competitors, customers or
suppliers.”48
[164] The CAC in eMedia noted that context matters. It noted that MultiChoice had a well -
entrenched dominant position (which was unlikely to change), and it did not have to
preserve this position at the expense of a black owned, medium sized competitor like
eMedia.49 Furthermore, it pointed out that there were barriers to entry and expansion in
the relevant market.50
[165] The context in this case is that South Africa’s commercial and retail banking industries
comprise a large and important part of the financial sector.
[166] The Applicants point us to the Competition Amendment Bill of 2017 which demonstrated
that the financial services sector is highly concentrated. They indicated that one of the
priorities of the Competition Amendment Bill was to pay special attention to the impact
of anti -competitive conduct on small businesses and firms owned by historical
disadvantaged persons.
[167] The Applicants further point us to the Commission’s Banking Enquiry Report, which
focused on retail banking and payments , and conducted a comprehensive market
power assessment, and found that each of the big four banks possess appreciable
market power despite none possessing a market share significantly above 30% in any
product category. Furthermore, the report found that the cost to customers of switching
banks (including the search costs in finding an alternative) are generally enough to
create a significant degree of customer captivity and so confer on banks an appreciable
create a significant degree of customer captivity and so confer on banks an appreciable
degree of market power. Furthermore, the oligopolistic conditions, high barriers to entry,
and information asymmetries, all contributed to the banks having an appreciable degree
48 Section 1(1) of the Act.
49 eMedia at para 102.
50 eMedia at para 104.
43
of market power over their ord inary customers and that they do exercise that market
power.51
[168] While the Banking Enquiry Report was issued in June 200 8, the Respondents did not
put up any facts or evidence to counter the Commission’s findings on market
concentration and market power in retail banking and payment services.
[169] An assessment of market power in this context requires us to consider whether the
decisions of the Respondent Banks individually are largely independent to the actions
and reactions of customers or competitors or suppliers.
[170] Based on the available evidence before us (including the recent history of the industry
as reflected in the Banking Enquiry Report), our view is that the Applicants establish, a
prima facie case, that each individual Respondent Bank has market power. This is
illustrated by the following:
170.1. The undisputed evidence indicating that there are high barriers to entry and
therefore new entry by potential competitors is unlikely to offer an effective
constraint to each Respondent Bank.
170.2. Notwithstanding the fact that individual companies belong to the Sekunjalo
Group and despite the Sekunjalo Group size and commercial signifi cance they
have not been able to exercise any countervailing power against each individual
bank or collectively. The Applicants , individually and as part of the Sekunjalo
Group, have struggled to open bank accounts with second and third tier banks
and are in danger of being unbanked by almost 100% of the banking services
market. The Applicants do not have other real alternatives for banking and
payment services , as we discuss below . The market position of customers
provides an indication of their inability to constrain the Respondent Banks.
170.3. The banking services market is highly concentrated . The Applicants’
unchallenged evidence is that Nedbank, Standard Bank, FirstRand, ABSA, and
Investec collectively have a market share of about 90%. This suggests that the
Investec collectively have a market share of about 90%. This suggests that the
market is oligopolistic, with a fringe of smaller players. A combination of factors
such as high concentration, high barr iers to entry , and a weak position of
51 Commission’s Banking Market Enquiry Report, Chapter 2, page 82
44
customers, suggests that the Respondents have an appreciable degree of
market power.
[171] We do not have to decide whether the Respondent Banks are collectively dominant
since on the prima facie evidence before us they individually possess market power.
[172] We now turn to consider below, the specific relevant elements needed to show a
prohibition under section 8(d)(ii).
Section 8(1)(d)(ii): Is there a refusal to supply a customer?
[173] It is common cause that th e Applicants are customers (or potential customers) of the
Respondent Banks.
[174] It is common cause in respect of the relevant bank accounts by the Respondent Banks
respectively (as per Annexure “A”) that the Respondent Banks had closed certain
Applicants’ banks accounts, save for Nedbank and Standard Bank, who have since the
hearing also closed the accounts, and/or certain of the Respondent Banks have refused
to provide banking services to specific Applicants when approached. It appears further
from the record that Bidvest and Mercantile respectively have an existing banking
relationship each with one of the Applicants. Both banks however have refused to
provide further banking services to the Sekunjalo Group when approached.
Section 8(1)(d)(ii): Are banking and payments service scarce?
[175] The Applicants state that almost 100% of the market has refused to provide banking
services to them. They submit, as noted by the Commission in the Banking Enquiry
Report that without a bank account and access to payment services, it would be difficult
if not impossible for an individual firm to participate in any modern economy and that
there are currently no real alternatives for individuals and businesses that want to
participate in the formal economy other than through banks.
[176] In response, the Respondent Banks argue that banking services are not “scarce goods
or services”. This is because banking services are offered by approximately 70 banks
or services”. This is because banking services are offered by approximately 70 banks
in South Africa. Those services do not become “scarce” merely because the Applicants
are unable to access them. Differently expressed, goods or services cannot be “scarce”
45
from the perspective of one purchaser if they are not “scarce” from the perspective of
all other purchasers.
[177] We are not persuaded by the Respondent Banks’ arguments that banking and payment
services are not scarce when considered in their proper context.
[178] As the evidence shows, all the large banks as well as a number of smaller ones have
closed the Applicants’ banks accounts.
[179] The Commission’s banking enquiry report noted “Without a bank account, and access
to payment services, it will be difficult, if not impossible for an individual to participate
effectively in any modern economy. Today, a bank account is usually required in the
formal economy in order to receive wages, and salaries; make a wide variety, or routine
payments, and access savings, and credit facilities. There are currently no real
alternatives for individuals, and business that want to participate in the formal economy.
Credit facilities, including home loans, are generally only available to those able to
service the debt via a transaction account.”52
[180] The Respondents have not seriously challenged the Applicants’ submissions in relation
to the role that commercial banks play in a modern economy and that players operating
in such economy cannot effectively function without access to banking and payment
services. Instead, the Respondents argue that the Applicants have continued operating
in the markets in which they are active despite their banking services being terminated
by some banks, that they have other alternatives in the form of other banks and that
they can make use of third-party payment service providers.
[181] However, on the evidence before us there appear to be no economic alternatives to the
Applicants. This is because Nedbank, Standard Bank, ABSA, Investec and FirstRand
are the major banks in South Africa, that on the evidence before us collectively hold the
bulk of the market share. Thus, there is a very high level of concentration in the hands
bulk of the market share. Thus, there is a very high level of concentration in the hands
of the large banks in South Africa. These banks have all terminated services to the
relevant Applicants or are contemplating same.
[182] Furthermore, not only is the banking market highly concentrated in the hands of the
largest banks, there also are high barriers to entry in the banking market including high
52 Commission’s Banking Market Enquiry Report, Chapter 2, para 2.1.2.
46
regulatory barriers and sunk costs. The Commission’s banking enquiry report notes that
most of the banks have noted that a large proportion of their costs are fixed. 53 The
enquiry found that this particular cost structure (i.e., high fixed and common costs)
drives concentration in banking and places certain limits on the extent of competition.
[183] The Applicants’ evidence is that they have also approached second and third tier banks
for banking services. These include mutual banks and local branches of foreign banks.
According to the Applicants, this segment of the market represents approximately 10%
of the market in terms of market share.
[184] Further, the Applicants say that the banks have also advanced as a reason for rejecting
the Applicants’ request for bank accounts either that they do not provide corporate
banking services to large co mpanies, or they provide such services only to listed
companies. In addition, the Applicants indicate that many foreign banks with branches
in South Africa have also been approached but that the Reserve Bank does not permit
the opening of bank accounts with foreign banks which have branches in South Africa.
So, both the large and small banks have refused to extend banking services to the
Applicants.
[185] Based on the available evidence before us, the Applicants have established a prima
facie case that banking services are a scarce service because of the undisputed
evidence on high entry barriers and a lack of credible alternatives.
Section 8(1)(d)(ii): Is it economically feasible for the Respondents to supply banking
and payment services to the Applicants?
[186] The Applicants rely on Sutherland and Kemp who point out circumstances where supply
may not be feasible for instance due to creditworthiness or capacity constraints. Since
none of these apply to the Applicants, they argue it is economically feasible for the
banks to supply the banking services.
banks to supply the banking services.
[187] Sasfin argue that it would not be feasible for it to reinstate services because of its small
number of employees (it employs 36 employees) and that it would have to employ at
least three additional people). the other Respondent Banks did not put up any
arguments on economic feasibility but rather focused their defenses on market power
53 Commission’s Banking Market Enquiry Report, Chapter 2, para 2.4.
47
and scarcity . Recall that Sasfin ha d a banking relationship with only one of the
Applicants.
[188] Sasfin’s argument assumes that it has made relationship specific investments with its
current customers and that it would not be economically feasible to use its current
employees to service the App licants. However, this argument overlooks the fact that
Sasfin already had bank accounts with three of the Applicants (see Annexure A) which
were closed in December 2021 and February 2022. Given the above, Sasfin’s claims
regarding feasibility appear to us to be over-broad and has not been substantiated with
quantified evidence. We further note that the relevant Applicants that had bank
accounts with Sasfin that had to be monitored by it have not been accused of money
laundering, corruption or unlawful activities.
[189] The other Respondent Banks did not put up any meaningful arguments on the economic
feasibility of providing services to the Applicants but rather focused their defenses on
market power and scarcity. They too either supply or supplied banking services to the
Applicants who have not been accused of money laundering, corruption or unlawful
activities.
[190] For the reasons set out above, we find that the Applicants have, prima facie, established
that it is economically feasible for each individual Respondent Bank to supply the
services. First, the undisputed evidence before us illustrates that the individual
Respondent Banks provided banking services to the Sekunjalo Group of companies
prior to the termination. Second, we are not persuaded on the evidence before us that
continuing to supply banking services to the Sekunjalo Group of companies would be
impractical, as occasioned by capacity constraints of the banks or the creditworthiness
of the Applicant firms.
Section 8(1)(d)(ii): Conclusion on exclusionary act
[191] Refusing to supply a scarce service to a customer when it is economically feasible is
[191] Refusing to supply a scarce service to a customer when it is economically feasible is
an exclusionary act. An exclusionary act as defined in the amendments to the Act, and
as reiterated in eMedia by the CAC, includes an act that prevents a firm from entering
or participating or expanding in a market. Participating in a market means the ability of
or opportunity for firms to sustain themselves in the market.
48
[192] For the reasons set out above, the Applicants establish a prima facie case of an
exclusionary act described in section 8(1)(d)(ii).
Section 8(1)(c): General exclusionary act
[193] The Applicants submit that the closure of the bank accounts and/or refusal to open bank
accounts is a refusal to deal which amounts to an exclusionary act under section 8(1)(c)
and 8(1)(d)(ii).
[194] Based on the assessment of the prima facie evidence under section 8(1)(d)(ii) above,
and from the same evidence (and assessment) the Applicants have established a prima
facie case of general exclusionary conduct relating to a refusal to deal under section
8(1)(c).
Our assessment of anti-competitive effects and efficiency justifications under section
8(1)d(ii) and 8(1)(c)
[195] The Respondent Banks argue that there are no allegations or evidence in the papers
that the termination of the Sekunjalo Group companies’ banking accounts extends,
creates, or preserves market power. Further, they state that there is no attempt by the
Applicants to define the relevant market or markets, and no dealing at all with how the
banks conduct could cause harm to consumer welfare or foreclose rivals. Further, the
Respondent Banks state that they have no incentive to engage in an exclusionary act
since they do not participate in the markets in which the Applicants operate. The exit of
the Applicants from those markets would not allow any of the Respondent Banks to
raise prices or to exclude competitors.
[196] The Applicants rely on the following as evidence of anti-competitive effects:54
196.1. Almost 100% of the market has been foreclosed to the Applicants as a result of
the individual Respondent Banks refusing to provide them with banking services.
54 We note, as correctly pointed out by the applicants that under section 8(1)(d)(ii) once the specified exclusionary
act has been established, the onus to show that anti -competitive effects are outweighed by the pro -competitive
gains of the exclusionary act.
49
196.2. The Applicants require banking and payment services to buy and sell goods and
services in order to compete in their various markets that they are active in, and
they will soon become unable to compete if the banks refuse to provide scarce
banking and payment services to the Applicants.
196.3. The Respondent Banks' conduct will force the Sekunjalo Group’s customers and
suppliers to cancel their agreements with the Sekunjalo Group of companies for
the provision of services and goods that are supplied to those customers or
procured from those suppliers.
196.4. The Sekunjalo Group of companies are therefore likely to be forced to exit the
markets in which they operate, with the result that there will be less competition
in those markets.
196.5. The effect of this conduct will therefore be that it will impede or prevent firms from
entering into, participating in or expanding within the markets in which they
operate, and particularly a black owned firm which the Act is specifically
mandated to promote.
[197] In eMedia, the CAC reminded the Tribunal to adopt a transformative constit utional
approach, and which is consistent with the scheme of the Act and apply a context -
sensitive approach. On a context sensitive approach, it singled out that the market was
highly concentrated and noted that this could easily lead to exclusion. The CAC in
eMedia stated as follows:
“It follows therefore that these are the guidelines this Court and indeed the
Tribunal must follow when applying the provisions of the Competition Act. The
approach calls for a transformative constitutional approach and must be
consistent with the scheme of the Competition and apply a context-sensitive
approach. This is a striking feature that must be considered in this application.
Unless this transformative approach is applied even at an interim stage of
proceedings, then the historical and insidious unequal distribution of wealth in
South Africa will continue. Guidance can be gleaned on the proper
South Africa will continue. Guidance can be gleaned on the proper
jurisprudential application of the Competition Act by following the dictum by
Jafta J in Matatiele where he explained t he principles of constitutional
interpretation which involves a combination of a textual approach and a
structural approach. (emphasis added)
50
“Any construction of a provision in a constitution must be consistent with the
structure or scheme of the Constitution. This provides the context within which
a provision in the Constitution must be construed.”
It follows therefore that in granting or refusing interim relief or indeed any relief
the jurisprudential and transformative context of the Competition Act must be
considered. Professor Fox draws attention to the dictum of Moseneke J in
Minister of Finance v Van Heerden, where he states that the achievement of
equality goes to the bedrock of our constitutional architecture. It informs all
law and against which all law must be tested for constitutional consonance.15
When interpreting any legislation, and when developing the common law or
customary law, every court, tribunal, or forum must promote the spirit, purport,
and objects of the Bill of Rights.
eMedia correctly submits that a scrutiny of the reasons given by the Tribunal
at this interim stage shows its failure to pay sufficient attention to the context
and purpose of the Competition Act. Particularly when it is evident that there
are high levels of economic concentration in this basic satellite platform which
can easily result in economic exclusion. MultiChoice’s market share in the
markets defined in the founding affidavit (including in the premium and basic
satellite markets) provide clear evidenc e of the excessive concentration of
ownership which prevail in the broadcasting industry. This point is highlighted
in the 2019 article by Professor Eleanor M Fox titled, “SOUTH AFRICA,
COMPETITION LAW AND EQUALITY Restoring Equity by Antitrust in a Land
where Markets were Brutally Skewed”. The abstract to the article provides as
follows:
“In South Africa, the question is not whether to incorporate “equality” into the
competition law, but how. In view of the history of heinous exclusion of all
black South Africans, South Africa has long recognized inclusiveness as a
black South Africans, South Africa has long recognized inclusiveness as a
competition law value. Recent amendments seek to further the equality goal.
This essay argues that, within a significant space, the goals of an equitable
and efficient competition law overlap. Maximizing this space requires a greater
appreciation of exclusionary conduct and its harmful effects. The author next
singles out the amendments that contemplate “transformation” obligations on
parties to some big mergers and contracts who are seeking clea rance or
51
exemption. She highlights the special challenges to transparency,
predictability, equal opportunity, and rule of law. She argues that with hard
work (which is being done) the system can be administrable, with due
process, and likely to engage the creative talents of the left-out majority”55
[198] We have above sketched the context in which the banks operate, including high levels
of concentration and high barriers to entry in the banking sector and more specifically
in banking and payment services, as found in the Banking Inquiry. The Banking Inquiry
found that each of the big four banks possess appreciable market power despite none
possessing a market share significantly above 30% in any product category.
Furthermore, the report found that among others, oligopolistic conditions, high barriers
to entry, information asymmetries, switching and search costs all contributed to the
banks having an appreciable degree of market power over their ordinary customers and
that they do exercise that market power.56
[199] The Applicants made it known to us that the Sekunjalo Group is a black owned firm.
They argue that as black owned firm they are being impeded from participating in the
various markets in which it operates.
[200] None of the above context issues placed before us by the Applicants were disputed by
the Respondent Banks.
[201] In this case, we note that unlike in eMedia where reference is made to the US guidance
that “an arbitrary refusal to deal by a monopolist cannot be unlawful unless it extends,
preserves or creates, or threatens to create significant market power in some market”57,
that would unnecessarily limit what section 8 , read against the amendments which
include participation by historically disadvantaged persons and black owned
businesses, seeks to do and undo. If the theory of harm being pursued is that the
refusal to supply by a dominant firm (in terms of section 7(c)) seeks to exercise market
refusal to supply by a dominant firm (in terms of section 7(c)) seeks to exercise market
power in way that it prevents a downstream firm from sustaining itself in a market rather
than creating, extending or preserving market power of the upstream firm, then in those
circumstances it is possible to find such conduct to be harmful to competition and
exclusionary.
55 eMedia at paras 84 – 86.
56 Commission’s Banking Market Enquiry Report, Chapter 2, page 82
57 eMedia at para 115.
52
[202] As the CAC held in eMedia, if the test for an exclusionary act now includes consideration
of a firm’s ability to sustain itself in the market, and if it can be shown on the facts that
conduct by a dominant firm prevents a firm from participating in the market, then a prima
facie case would have been made out. Without a bank account the Applicants cannot
participate and/or expand in the markets that they operate in and will be forced to exit
the markets in which they participate. We also deal with the evidence before us showing
the Applicants’ inability to participate in the markets in which they operate, and their
inability to sustain themselves, under irreparable harm.
[203] For the reasons set out above, the Applicants establish a prima facie case of foreclosure
and therefore anti-competitive effects.
[204] The CAC in eMedia buttressed its reasoning in giving interim relief to eMedia with the
following passage citing the Tribunal’s decision in Bulb Man:
“It also follows from the above analysis that MultiChoice is engaged in an
exclusionary act in refusing to allow eMedia’s channels to be broadcasted on
its platform and therefor this p rovides a further ground to uphold the appeal.
The Tribunal in Bulb Man stated the legal position in applying s 8(1)(d)(ii) to a
refusal to deal situation. This is the important issue to be determined in this
case since it cannot MultiChoice has not been a ble to objectively justify its
stance.”58
[205] The Respondent Banks rely on the justification of reputational risk as a reason for the
refusal to provide the Applicants with banking and payment services under both
sections 8(1)(d)(ii) and 8(1)(c).
[206] The Applicants dispute that the banking regulations relied upon by the Respondent
Banks require that they close customer’s banking accounts on the basis of reputational
risk.
“There is no question that the supply of banking services to the applicants is
economically feasible. The argument advanced by the banks based on
economically feasible. The argument advanced by the banks based on
“reputational risk”, or their reliance on Bredenkamp or regulatory framework is
simply misplaced. As we shall demonstrate below, none of the pieces of
58 eMedia at para 115.
53
legislation they invoke supports their position. We have demonstrated that the
factual matrix in Bredenkamp is absent in this case. We have demonstrated
that in any event Bredenkamp has been overtaken by Constitutional Court
equality jurisprudence and by legislation.”59
[207] The Applicants argue further that to the contrary the Respondent Banks have provided
banking services to other (white owned or favoured) firms reportedly also carrying
reputational risks for the Respondent Banks. They state that:
“The respondents reasoning of re putational risk is fatally flawed when you
consider that at least twenty companies involved in at least R200 billion of
corruption such as the likes of Steinhoff, EOH, Tongaat, ABB, Glencore and
many other are still clients of these respondents.”60
[208] The efficiency or procompetitive argument put forward by the Respondent Banks relates
to reputational risk based on the legislative environment in which they operate . Again,
we note that because of the importance of reputatio n in the banking industry, it is not
surprising that firms would want (or be required through regulation) to put in place
reasonable risk mitigation strategies which are proportionate to the risks.
[209] On this reputational risk argument, the Applicants argue that the relevan t legislative
framework does not require the Respondent Banks to take very aggressive pre-emptive
measures such as the closure of bank accounts but require s them to monitor, record
and report suspicious transactions to the Financial Intelligence Centre and other
prosecutorial bodies. The Applicants allege that the Respondent Banks’ application of
this justification is biased as they continue to be associated with the PIC through its
shareholding in (certain of) them, and continue to provide banking services to the PIC,
and in circumstances in which the Mpati Commission also made adverse findings
against the PIC. The Applicants state that further evidence of this bias can be seen in
against the PIC. The Applicants state that further evidence of this bias can be seen in
the fact the Respondent Banks have continued to provide payment services to a number
of white owned companies who have been found guilty of financial fraud and financial
misconduct. Moreover, the Respondent Banks themselves stand acc used by the
Commission of price fixing in a case before the Tribunal. Their argument on this point
is that a price fixing allegation is itself in an allegation of a conspiracy against the public
59 Sekunjalo Heads of Argument at para 88.
60 Sekunjalo Replying Affidavit at para 116.
54
and therefore is an allegation of corruption and is a reputational risk for the Respondent
Banks.
[210] We note that a selective approach to closing down accounts of disfavoured firms while
keeping accounts of favoured firms open by the Respondent Banks on the grounds of
reputational risk suggests to us, on a prima facie basis, that such conduct is not
designed to effectively attain the claimed efficiencies and is not reasonably necessary
for that purpose.
[211] In our view, self-regulation as a justification to a refusal to supply a customer by the
individual Respondent Banks in this case illustrates the manifest conflict of interest by
the Respondents Banks. As indicated, other avenues are open to the Respondents to
report to the relevant authority or authorities.
[212] The CAC in eMedia found that Multi Choice’s explanation for the refusal to supply
distribution services provided ex -post facto could not be objectively justified. It found
the explanations were unpersuasive and point in the direction of a dominant firm
warding off competition. In this case, we find that the Respondent Banks’ explanations
are unpersuasive because the evidence before us suggests that they are not applied in
an unbiased way and thus not objectively justified.
Conclusion under section 8(1)(d)(ii) and 8(1)(c)
[213] As discussed earlier, under section 8(1)(d)(ii) the onus to show procompetitive gains
that outweigh the anti -competitive effects of the alleged refusal to deal is on the
Respondent Banks, while the onus to show any alleged anti -competitive effects of the
refusal to deal under section 8(1)(c) is on the Applicants.
[214] In light of the above assessment and the available evidence before us, we find that the
Applicants establish a prima facie case under 8(1)(d)(ii).
[215] For the reasons set out above, we find that the Applicants have done enough to
establish a prima facie case under section 8(1)(c) and to discharge the onus of prima
facie anti-competitive effects.
55
Nedbank: Is there prima facie evidence relating to the alleged prohibited
practice under Section 8(1)(d)(iii)?
[216] In respect of Nedbank specifically, the Applicants allege that Nedbank has also
contravened section 8(d)(iii) of the Act because Nedbank wants to sell its services to
the Applicants on condition that the Applicants dispose of its shareholding in Premier
Fishing. Nedbank was prepared to continue banking the Premier Fishing Group as there
was a pending transaction wherein AEEI and the Sekunjalo Group were to divest their
interests in the Premier Fishing Group. This would have reduced the r isk and
reputational harm to Nedbank due to the findings of the Mpati report. Specifically, the
allegation is that Nedbank is forcing Premier Fishing to accept a condition unrelated to
the object of providing banking services.
[217] Nedbank’s response is that the condition responds to the reputational risk for Nedbank
because the Sekunjalo Group will no longer own shares i n the Premier Fishing group.
Moreover, it argues that it has no incentive to leverage its putative market power.
Our assessment of section 8(1)(d)(iii)
[218] We note that Nedbank’s response does not challenge the allegation establishing the
exclusionary act but rather it seeks to put forward an efficiency or procompetitive
justification. In other words, Nedbank’s approach to the allegation is to state that any
anti-competitive effects are outweighed by procompetitive gains of the conduct.
[219] In our assessment of the allegation under section 8(1)(d)(iii), we find that the Applicants
establish a prima facie case of forcing a buyer to accept a condition unrelated to the
object of the contract.
[220] Further, as argued above under the section 8(d)(ii) assessment, the Respondent Banks’
selective approach to enforcing the rule on reputational risk demonstrates prima facie
that the conduct of the banks in relation to the Applicants is not designed to effectively
that the conduct of the banks in relation to the Applicants is not designed to effectively
attain the claimed efficiencies and is not reasonably necessary for that purpose.
56
Is there prima facie evidence relating to the alleged prohibited practice under
Section 5?
[221] The Applicants argue that:
221.1. The business relationship between the banks and the Sekunjalo Group is
vertical.
221.2. The refusal to provide banking and payment services by terminating the
agreements has the effect of substantially preventing or lessening competition in
the various markets in which the Sekunjalo Group operates.
221.3. Thus, the agreements between the banks and the Sekunjalo Group contravene
section 5(1) of the Act.61
[222] The Respondent Banks respond to the section 5 allegation by stating that this allegation
is misconceived as there is nothing about the existence of a termination clause in a
contract between a bank and an Applicant that would give rise to anti-competitive effects
of the sort envisaged by section 5. The Respondent Banks also argue that the
Applicants have failed to establish any harm to competition and that the CAC in South
African Breweries Ltd and others, has stated that, “it must follow that some likely effect
upon price, output and/or quality of product which diminishes consumer welfare should
be shown to exist in order to trigger the application of section 5(1) .”62 However, the
guidance in South African Breweries Ltd and others, came before the 2018 Competition
Amendment Act, which expanded the definition of what constitutes an exclusionary act
and therefore what constitutes harm.
[223] We found that the Applicants’ allegation under section 5(1) was raised conceptually and
not much evidence on it was put before us to support or rebut arguments to enable us
to carry out a proper prima facie assessment.
61 Section 5(1) prohibits agreements between firms in a vertical relationship if that agreement will have an adverse
effect on competition which cannot be efficiency justified. The onus to prove an adverse effect on competition rests
on the Applicant. It follows that only once the Applicant has established a ca se, the burden of proof shifts to the
respondent to assert its efficiency or pro-competitive gain defense. Should it fail to do so, it may be concluded that
the respondent has contravened section 5(1).
62 Competition Commission v South African Breweries Ltd and others at para 60.
57
Conclusion on evidence of a prohibited practice
[224] For the reasons set out above, we find that the Applicants establish prima facie that the
Respondent Banks have engaged in a concerted practice involving the termination of
the Applicants accounts and refusal to supply banking services (outrightly or
constructively) to the Applicants amounting to a restricted horizontal practice in terms
of section 4(1)(a).
[225] For the reasons set out above, we find that the Applicants establish prima facie a case
of prohibited practice on the part of the individual Respondent Banks relating to an
abuse of dominance in terms of section 8(c) (exclusionary conduct on the part of the
Respondents) or section 8(d)(ii) (refusal to supply scarce services). We find that on the
allegation against Nedbank under section 8(1)(d)(iii), the Applicants establish a prima
facie case of forcing a buyer to accept a condition unrelated to the object of the contract.
[226] We do not conclude under section 5.
Irreparable harm and balance of convenience
[227] We now turn to discuss the remaining elements of section 49C of the Act, the need to
prevent serious or irreparable damage to the applicant(s) and balance of convenience.
Applicants’ submissions on harm and balance of convenience
[228] The Applicants argue that their interim relief application is about:
228.1. staying in the various product and service markets in which they operate;
228.2. survival for the Applicants;
228.3. succeeding in their markets as a black owned firms;
228.4. being allowed to compete freely; and
228.5. being allowed to enjoy their pre-ordained and necessary pre-eminence.
58
[229] As contextual background they submit that the Sekunjalo Group has sought to promote
employment, and participation in the economy of South Africa over the past 26 years.
The Applicants have interests in Media Publishing, ICT, Healthcare and
Pharmaceuticals, Energy and Power, Asset Management and Financial Services,
Biotechnology, E-commerce, Fishing and Aquaculture, Private Equity and Investments
and Telecommunications. The Sekunjalo Group is also the first black empowerment
group to control a large media company in South Africa. Certain of the businesses within
the Sekunjalo Group import or export products or services and therefore from a banking
perspective require access to merchant facilities and foreign exchange facilities.
[230] Again, as context, they submit that the Sekunjalo Group’s annual revenue amounts to
approximately R8.5 billion. They state that the Sekunjalo Group funds its capital growth
itself through re -investments in entities within the Sekunjalo Group as well as
intercompany loans. This requires the transfer of funds for purposes of intercompany
loans or investments between Sekunjalo Group entities from time to time.
[231] The Applicants argue that they have either been foreclosed or are in danger of being
foreclosed by 100% of the banking services market and that they do not have other real
alternatives for banking and payment services. They point to the five large banks in
South Africa having approximately 90%63 of the market, as per the Prudential Authority’s
2020/21 Annual Report64, and that these five large banks have all decided to terminate
their services to the relevant Applicants or may do so ( specifically in the case of
Standard Bank65 and Nedbank).
[232] The Applicants further argue that if the interim relief is not granted, they are likely to be
left unbanked and that no business can survive without a bank account in a modern
economy. They say that they cannot effectively compete in the various markets in which
economy. They say that they cannot effectively compete in the various markets in which
they operate without banking services. The latter they say will have deleterious
consequences on the public interest. The adverse public interest effects include the loss
of a large number of jobs, livelihoods of tens of thousands of people and loss of
63 The Applicants submit that the Prudential Authority in its 2020/21 Annual Report found that the banking sector is
dominated by the five largest banks which collectively hold 90.1%.
64https://www.resbank.co.za/content/dam/sarb/publications/reports/pa-annual-
reports/2021/Prudential%20Authority%20Annual%20Report%202020%202021.pdf.
65 See paragraph 340 dealing with Standard Bank’s decision to also terminate banking services to the relevant
Applicants.
59
competitive black-owned businesses which goes against the very objects of the Act.
Not granting the relief therefore will cause them serious or irreparable damage.
[233] They furthermore argue that Mediclinic should be the guiding jurisprudence in
determining this application and that Mediclinic re-emphasises the centrality of the
purposes of the Act in its interpretation. In that context it is manifestly reasonable and
just to grant them the interim relief.
[234] The Applicants dismiss the defences of the Respondent Banks and argue inter alia that
the regulatory framework governing the banking industry does not authorise the
Respondents to contravene the Act. They argue that the banks may not terminate a
banking relationship in contravention of the Act and if any termination violates the Act,
the Tribunal is entitled, and duty bound to intervene.
[235] They further argue that this case is no t about breach of contract but about the anti-
competitive conduct of the Respondent Banks while hiding behind opaque
considerations of “reputational risk” or “risk appetite” and regulatory prescripts about
criminal activities that find no application in the circumstances of this case.
[236] They also allege that the Respondent Banks are selective as to who poses a
reputational risk to them. They aver that unlike many of the companies that have
admitted to fraud such as EOH, Tongaat Hullet and Steinhoff, that th e Respondent
Banks have continued their banking relationships with these companies including
providing large lending facilities to them. They say that, in contrast, in the case of the
Applicants none of the banks currently provide any material lending facilities to them
and therefore do not face any fiscal risk in relation to the Applicants.
[237] They deny that the relief sought by them would have a severe adverse impact on the
South African banking system generally. They argue that had that been the case, SARB
South African banking system generally. They argue that had that been the case, SARB
and/or the Prude ntial Authority would have acted swiftly to protect the South African
banking system as its custodians.
[238] The Applicants submit that they would suffer immense prejudice if they were left with
no banking services.
60
Respondents’ submissions on harm and balance of convenience
[239] The Respondents argue that the alleged harm to the Applicants is caused by the
allegations that bedevil the Sekunjalo Group, which allegations have tainted the
Sekunjalo Group’s reputation and led to many stakeholders, including banks, refusing
to do business with the Sekunjalo Group.
[240] They submit that the element of irreparable harm ought not to be countenanced by the
Tribunal, because the Sekunjalo Group has failed to p rove the first requirement for
section 49C, as it has failed to place before the Tribunal ( prima facie) evidence of a
prohibited practice. Said another way, if there is no ( prima facie) evidence that the
Respondent Banks engaged in an alleged prohibited pr actice, then it cannot be said
that the Sekunjalo Group has suffered any irreparable harm as a consequence of the
(unproven) prohibited practices. Put another way still, any irreparable harm suffered by
the Applicants is not as a consequence of the alleged prohibited practice, as none have
been established by any (prima facie) evidence.
[241] They also argue that the Applicants have failed to identify clear competition harm if the
relief was not granted and that competition law aims to protect the competitive process
from harm, not an individual competitor.
[242] The Respondent Banks further argue that the Applicants will not suffer any serious or
irreparable damage if the interdict is not granted and if their complaints are upheld in
due course, for inter alia the following reasons:
242.1. The Applicants have other alternatives in that there are approximately 70 banks
operating in South Africa and the Applicants could approach those other banks
for banking and payment services.
242.2. Some of the Applicants have accounts with the Second Respondent, Standard
Bank, which has not (at the time of the hearing) given notice of its intention to
close their accounts.66
close their accounts.66
66 See paragraph 340 dealing with Standard Bank’s decision to also terminate banking services to the relevant
Applicants.
61
242.3. The Applicants may use third -party paying agents in some instances (even if
this is said to increase costs), and they currently continue to trade and compete
utilising those alternative service providers. The Applicants are therefore not
left without options and have not established that any increased cost would be
fatal to the operation of the Applicants in any relevant markets.
242.4. None of the Applicants’ entities which have had their bank accounts terminated
have been wound up or have been liquidated. This suggests that these entities
are indeed capable of operating post the closure of their bank accounts.
[243] As far as the balance of convenience is concerned the Respondent Banks argue that
the balance is in their favour as:
243.1. The Respondent Banks would be prejudiced if forced to continue providing
banking services to the Applicants or to reopen banking services to the
Applicants since there are valid reasons not to provide them services since the
Applicants as clients fall outside of their applicable risk -parameters. This is
because of the substantial reputational risk / harm that the continuation of such
services entails. The risk includes the potential loss of business and revenue,
increased administrative and monitoring burdens, regulatory or legislative
action, including the deterioration of their relationship with regu lators and
correspondent banks, a loss of existing and potential client business, and an
impact on/reduction in their ability to retain key employees.
243.2. Forcing the Respondent Banks to continue providing banking services to the
Applicants or to reopen those services would bring the Respondent Banks
squarely into conflict with Regulation 39 of the Regulations Relating to Banks,
promulgated in terms of section 90 of the Banks Act, 1990. Regulation 39
specifically requires a bank to consider reputational r isk in its management of
risk. This will increase their legal, regulatory and reputational risks domestically
risk. This will increase their legal, regulatory and reputational risks domestically
and as an international counterparty in the banking system.
243.3. The Respondent Banks have to comply with international best practices and
standards applicable to the banking sector. This is critical for the integrity of the
banking sector and these practices and standards require them to take steps
to prevent it being used for money laundering or other unlawful activities. This
62
could have adverse effec ts on relationships with correspondent banks and
other stakeholders.
243.4. There are options still available to the Applicants to secure banking services
while their complaint is being investigated by the Commission.
243.5. The applicable banking agreements entitle both the Respondent Banks and the
Applicants to terminate them, at any time, by giving each other the requisite
notice. In other words, the Applicants are not entitled to obtain banking services
from the Respondent Banks as of right. If the Tribunal goes b ehind the terms
of the banking agreement, it would, in effect, be casting banking agreements,
and banking relationships in general, in disarray.
Our assessment
[244] We have above already assessed whether the Applicants have made out a prima facie
case of a prohibited practice or practices and do not repeat those findings here.
[245] In GovChat the Tribunal confirmed that it has a discretion in the granting of interim relief
having regard to what is reasonable and just in the circumstances: “section 49C
therefore confers a discretion on the Tribunal to grant interim relief having regard to
what is reasonable and just in the circumstances .”67The Tribunal went on to explain
“The three legs of the inquiry are however considered holistically. Thus, a weak case
on say irreparable harm may be counterweighted by a very strong case on the
prohibited conduct. And vice versa, a weak case on prohibited conduct may be
counterweighted by a strong case on irreparable harm”68 (emphasis added).
[246] York Timbers similarly states that as far as the remaining factors are concerned “viz,
irreparable damage and the balance of convenience, these are not looked at in isolation
or separately but are taken in conjunction with one another when we determine our
overall discretion”69 (emphasis added).
67 GovChat at para 160.
68 GovChat at para 160. Also see Vexall (Pty) Ltd v Business Connexion (Pty) Ltd Another, Case No. IR119Oct19
at paras 17-20.
at paras 17-20.
69 York Timbers at para 66.
63
[247] The factors listed in section 49C(2)(b) of the Act therefore are not a list of prerequisites
for the granting of interim relief. The three factors should be weighed against each other
to determine what in the discretion of the Tribunal is ‘reasonable and just’.70 This means
that even if the Applicants’ case was weak on prima facie evidence of a prohibited
practice, that alone would not be determinative of the question of ‘reasonable and just’
if they make out a strong case on, for example, irreparable harm. Recall that a
successful interim relief applicant is only required to make out a prima facie case of a
prohibited practice, not to establish its case on a balance of probabilities.71
[248] The CAC in eMedia stated the following in regard to irreparable harm “There is usually
no time to delve too deeply in serious or irreparable harm but at the very least it must
be assessed in the context of whether there is a prima facie right at the interim level. As
long as there is clear and non -speculative evidence about possible anti-competitive
effects, then serious consideration must be given to the grant of the relief. In addition,
the proper consideration of the balance of convenience applied to the facts also
provides further checks and balances to ensure an equitable result.”72
[249] The CAC in eMedia also gave the following guidance in applying the principles in
section 49C(2) of the Act: “In applying the three principles in s 49C(2) cognisance must
be taken of whether clear, non -speculative and uncontroversial facts ha ve been
presented by an applicant from which it could be reasonably and logically inferred, on
a balance of probabilities, that the alleged irreparable harm would occur.”73
[250] The CAC in eMedia furthermore advised that the Tribunal must take into account the
context of the Act requirement saying that “ The jurisprudential and transformative
principles apply both at interim relief stage and at final relief stage. Section 49C (3) of
principles apply both at interim relief stage and at final relief stage. Section 49C (3) of
the Competition Act equates the standard of proof as the same standard as in Hig h
Court common law interim relief. The principles are trite.”74
[251] To assess if the alleged damage /harm would occur, one must have regard to the
economic context and importance of having access to banking services.
70 Competition Law of South Africa, Phillip Sutherland, Lexis Nexis, November 2021, p 11-44 para 11.6.2.
71 Inter alia GovChat at para 20.
72 eMedia at para 93.
73 eMedia at para 8].
74 eMedia at para 95.
64
[252] The Commission’s banking enquiry report noted “Without a bank account, and access
to payment services, it will be difficult, if not impossible for an individual to participate
effectively in any modern economy. Today, a bank account is usually required in the
formal economy in order to receive wages, and salaries; make a wide variety, or routine
payments, and access savings, and credit facilities. There are currently no real
alternatives for individuals, and business that want to participate in the formal economy.
Credit facilities, includ ing home loans, are generally only available to those able to
service the debt via a transaction account.”75
[253] As indicated, the Respondents do not seriously challenge the Applicants’ submissions
in relation to the role that commercial banks play in a modern economy and that players
operating in such economy cannot effectively function without access to banking and
payment services. Instead, the Respondents argue that the Applicants have continued
operating in the markets in which they are active despite their banking services being
terminated by some banks, that they have other alternatives in the form of other banks
and that they can make use of third-party payment service providers. We shall assess
the issue of economic alternatives below.
[254] No commercial transaction of substance and scale is possible without access to banking
services. To illustrate how dependant one is on access to and indeed proof of a bank
account, the Applicants point out that you cannot finance a house, or land without
having a bank account. You cannot be in gainful employment without a bank account,
as the employer pays your salary into the bank account. You also cannot finance the
acquisition of an asset or a business without a bank account. You can't even secure a
travel visa to many countries without providing bank statements.
[255] Furthermore, firms operating in markets need access to banking facilities to pay salaries
and wages to employees, purchase goods and services from suppliers and service
providers, receive payments from their customers, apply for credit and loan facilities,
finance acquisitions of assets / businesses, to name but a few examples of the banking
services required in a modern economy to participate and expand in any market.
Indeed, banking and payment services provide the lifeblood to any corporate citizen to
function optimally and to effectively compete in a modern economy. Furthermore, it is
axiomatic that a JSE listed company may not trade without a banking account and
therefore not having a bank account of its own is not an option for listed entities.
75 Commission’s Banking Market Enquiry Report, Chapter 2, para 2.1.2.
65
[256] Given the above, we concur with the Applicants that access by firms to banking and
payment facilities offered by banks are indispensable for any firm operating in a modern
economy.
[257] Having concluded the above, one furthermore must consider the potential competition
and public interest consequences of not having access to banking and payment
facilities, i.e., if the Applicant firms are left unbanked.
[258] The adverse consequences of not having access to ba nking and payment services
would include the inability of a firm to attract investment and expand in the market(s)
that it operates in and apply for credit /loans, as well as the adverse reactions of
customers and suppliers when confronted with transacting with a firm without banking
and payment facilities. Clearly such a situation would be untenable in a fast -paced
modern economic environment.
[259] As an example of how their firms may be affected by banking service terminations, the
Applicants explain the actua l, material harm they experienced in relation to Puleng
Technologies (Pty) Ltd (“Puleng”) following the termination of banking services to
Puleng. Puleng is an ICT security solutions company that provides services to large
organisations. After closure of the account facilities, Puleng implemented various third-
party payment solutions for business continuity purposes. This however was not
successful.
[260] The Applicants submit that following the termination of banking services to Puleng, they
were forced to sell Puleng, a company that was doing R300 million turnover , at a loss
as a consequence of having its banking facilities closed. They also explain the reactions
of third parties to Puleng not having a bank account. In July 2021, Discovery terminated
its contracts with Puleng for the supply of goods and services, citing its unwillingness to
accept third party payment options. It said: “ Discovery, being a registered financial
accept third party payment options. It said: “ Discovery, being a registered financial
services provider operating within highly regulated parameters, unfortunately cannot
accept any of the payment options as these may potentially expose us to legal and
regulatory consequences.”76 When Puleng sent Discovery an invoice in August 2021
76 The Applicants provided a copy of the termination letter. See “RA3” to their Replying Affidavit.
66
for payment with third party banking details, Discovery refused, saying: “ we cannot
accept the option to pay into the account provided that you have listed in your invoice.”77
[261] In the above economic context, we are satisfied that one can infer that if the Applicant
firms do not have access to banking and payment services, they will be significantly
hampered in operating effectively in a modern, fast-paced, technology-driven economy.
This will prima facie affect competition in the markets that they operate in, and from a
consumer perspective affect the choices of customers in the affected markets, which
the Act seeks to promote. 78 We note that an interim relief applicant does not have to
show evidence of exiting a market to show irreparable harm to it.
[262] Importantly, if the Applicant firms are hampered in their ability to compete in the markets
that they operate in, the public interest such as the promotion of employment and
retention of jobs as well as empowerment could be severely affected.
[263] It is not d isputed that the Sekunjalo Group is an empowerment Group. Established in
1997, Sekunjalo Investment Holdings is a black economic empowerment entity.
[264] It is also not disputed that the Sekunjalo Group provides employment to over 8,500
people with tens of thousands of dependents, mostly from poor black communities. 79
Should Sekunjalo not have access to banking and payment services, many if not all of
those jobs could be in danger of being lost, and the participation of tens of thousands
of people from black communities in the economy could be in danger of being lost.
[265] In terms of the Puleng lived experience, the Applicants contend that Puleng’s Chief
Executive and a large number of staff resigned as a direct result of FNB terminating the
firm’s banking facilities in June 2021. 80 From the beginning of July 2021 cancellation
notices started coming in from clients, some not citing any reason for terminating their
notices started coming in from clients, some not citing any reason for terminating their
business relationship with Puleng while others (like Discovery) citing their discomfort
with transacting via third party banking facilities. 81 With the exodus of staff, including
77 The Applicants provided a copy of that correspondence. See “RA4” to the Replying Affidavit.
78 See Preamble of the Act: The Act has been enacted to inter alia “provide for markets in which consumers have
access to, and can freely select, the quality and variety of goods and services they desire;”.
79 Sekunjalo Investment Holdings employs over 2 400 employees. The Sekunjalo Group, in total, employs over 8
500 employees.
80 Founding Affidavit, para 251.
81 Founding Affidavit, para 253.
67
senior management and technical staff, many clients felt that Puleng could no longer
deliver a proper service. Many Puleng staff were poached by competitors.82
[266] Given the above, we conclude that it can reasonably and lo gically be inferred that not
granting the interim relief will have significant adverse implications for the Applicant
firms.
Economic alternatives of the Applicants
[267] The Applicants submit that there are 31 registered banks in South Africa under the
supervision of the Prudential Authority. The Respondent Banks submit that there are
approximately 70 banks operating in South Africa that the Applicants can approach for
services.
[268] The Applicants further submit that Nedbank, Standard Bank, FirstRand, ABSA, and
Investec collectively have 90.1% of the South African market for the provision of banking
services according to the Prudential Authority.83
[269] ABSA, FirstRand, Nedbank and Investec have terminated the provision of banking and
payment services to some of the Applicants with whom each had a banking relationship.
Nedbank was poised to terminate more facilities in respect of the remaining Applicants
on 15 March and 9 May 2022. As ind icated above, Standard Bank placed the
Applicants’ facilities under review, decided not to on -board new entities within the
Sekunjalo Group and has since terminated services to the relevant Applicants. The
Applicants claim therefore that the bulk of the ma rket is collectively and unilaterally
refusing to provide banking and payment services to them.84
[270] In relation to the Applicants’ alleged alternatives and whether a significant portion of the
banking market is at risk of not being available to the Applica nt firms, we note that
Nedbank, Standard Bank, ABSA, Investec and FirstRand are the major banks in South
Africa, that on the evidence before us collectively hold the bulk of the market share.
Thus, there is a very high level of concentration in the hands of the large banks in South
Thus, there is a very high level of concentration in the hands of the large banks in South
Africa. These banks have all terminated services to the relevant Applicants or are
contemplating same. Other than these five large banks, relief is sought against four
82 Founding Affidavit, paras 256-260.
83 Trial Bundle Vol 5 at para 14 p 2387.
84 Trial Bundle Vol 1 at paras 117- 126 pp 33-44.
68
more banks that have also terminated their banking services to the relevant Applicants.
Therefore, on the evidence before us the bulk of the banking services market (in terms
of market share) has refused to provide banking and payment services to the relevant
Applicants or are contemplating not providing services.
[271] Furthermore, not only is the banking market highly concentrated in the hands of the
largest banks, there also are high barriers to entry in the banking market including high
regulatory barriers and sunk costs. The Commission’s banking enquiry report notes that
most of the banks have noted that a large proportion of their costs are fixed. 85 The
enquiry found that this particular cost structure (i.e., high fixed and common costs)
drives concentration in banking and places certain limits on the extent of comp etition.
The concentration of banks produces an oligopoly structure which facilitates strategic
interaction among the participants.86
[272] The Applicants’ evidence was that they have also approached second and third tier
banks for banking services. These include mutual banks and local branches of foreign
banks. According to the Applicants, this segment of the market represents
approximately 10% of the market in terms of market share.
[273] The Applicants state that the other banks approached have either declined to open bank
accounts citing “reputational risk” or claimed not to provide the kind of banking services
required, or simply never responded. They say that the banks have also advance d as
a reason for rejecting the Applicants’ request for bank accounts either that they do not
provide corporate banking services to large companies, or they provide such services
only to listed companies. In addition, the Applicants indicate that many fore ign banks
with branches in South Africa have also been approached but that the Reserve Bank
does not permit the opening of bank accounts with foreign banks which have branches
does not permit the opening of bank accounts with foreign banks which have branches
in South Africa. So, both the large and small banks have refused to extend banking
services to the Applicants.
[274] Examples given of the banks that the Applicants approached include:
85 Commission’s Banking Market Enquiry Report, Chapter 2, para 2.4.
86 Commission’s Banking Market Enquiry Report, Chapter 2, para 2.4.
69
274.1. Magic828 Radio, a radio broadcasting and advertising company, approached
Bank Zero and Standard Bank after its banking services were terminated, and
no responses have been received from them;87
274.2. Afrinat (Pty) Ltd, a national research and development, technical advisory and
manufacturer of agricultural products firm, approached Grow Bank, HBZ, Bank
Zero, Nedbank, Sasfin, Mercantile, Standard Bank, Bidvest, State Bank of India
and Al-Baraka. All these banks refused to provide banking services. Afrinat
requires access to banking and payment services including a forex exchange
facility to procure raw materials from overseas suppliers;88 and
274.3. Bidvest has refused to open a bank account for Health System Technologies
(Pty) Ltd (“HST”), a specialist provider and integrated healthcare ICT solutions
company. HST provides services to all National Health Laboratory Systems.89
[275] The Applicant firms in our view do no t in interim relief proceedings have to provide
evidence of having approached every other bank in South Africa to make out a case of
irreparable harm.
[276] As indicated above, the Respondent Banks also argued that the Applicants can make
use of third-party payment providers, albeit at a higher cost.
[277] In terms of economic alternatives available to the Applicants, they say that i t is not
possible for them to continue to operate without transactional banking accounts
because the scale, volume and complexity of the transactions require bank accounts.90
In other words, third-party payment providers are not real alternatives in economic terms
to the services provided by banks.
[278] The Applicants submit that (certain) customers will not agree to making payments into
third party accounts and therefore it is not possible for these businesses to continue to
operate without transactional banking. We have above already discussed the reaction
of the market to Puleng making use of third -party payment service providers. The
of the market to Puleng making use of third -party payment service providers. The
87 Founding Affidavit at paras 222-227.
88 Founding Affidavit at paras 228-233.
89 Founding Affidavit at paras 245-249.
90 Replying Affidavit para 18.
70
Applicants contend that this led to the demise of the Puleng business which had to be
subsequently sold at a loss.
[279] The Applicants further explain that in the short term, some of the companies that do not
have bank accounts were able to, in the case of group investment holding companies,
utilize the subsidiaries to be able to transact. This was because the subsidiaries had
accounts with banks that had not yet closed their accounts. This situation has changed
manifestly in that with the subsidiary accounts now being closed, in most cases it
becomes extremely difficult even for investment holding companies to operate.
[280] The Applicants also argue that third -party payment providers are not effective
alternatives since the cost of utilising them is prohibitive.
[281] The Applicants also say that in some cases third-party payment service providers have
serious limitations and that making use of them is only applicable in a very few instances
and mostly with smaller businesses or entities that do not require large scale and
complex revenue and expenditure transactional facilities. For example, t he Applicants
submit that Orleans, an i mporter and distributor of cosmetics to leading retailers and
beauty salons, unsuccessfully held discussions with third party service providers
because they have no platform to pay overseas suppliers. 91 Furthermore, the SARB
does not allow forex payments out of or into third party accounts on behalf of another
company.
[282] The Respondent Banks do not challenge that making use of the services of third-party
payment providers is more expensive but say that t he Applicants have not shown that
it would be fatal to their operation in any relevant markets. Nedbank, for example,
concedes that the Applicant may not be able to use third party agents in all cases and
that their costs may be higher “ Chair, we also say that it would be possible for the
applicants to use third party paying agents, at least in some cases. The applicants say
applicants to use third party paying agents, at least in some cases. The applicants say
that will increase their costs, and that may well be correct. But, with respect, they don't
say it’s impossible, at least not in all cases.”92
91 Founding Affidavit at paras 234-240.
92 Transcript page 101.
71
[283] We find that prima facie the services provided by third-party payment providers are not
economic substitutes for the services provided by banks and that suffices for interim
relief purposes.
[284] Given the above, we conclude that the Applicants have demonstrated the general
extent of the significant harm that they would suffer if the relief requested is not granted,
including potential significant adverse effects on the public interest (employment and
empowerment) and therefore in our view the Applicants have made out a strong case
for the need to prevent serious or irreparable damage to them.
[285] Regarding the Respondent Banks’ arguments regarding the harm that they would suffer
if the interim relief was granted, we do not on the evidence before us find it persuasive
that the banks’ legislative environment is a justification for them having terminated the
Applicants’ banking and payment facilities or are refusing to provide them with such
facilities. There is no evidence that the Applicants have been found guilty of money
laundering, financing or acts of terrorism or other unlawful activities. There is also no
actual and verified evidence of criminal conduct by the Applicants. Moreover, ev en if
one were to assume some reputational harm on the side of the Respondent Banks if
the interim relief is granted, this in our view would not trump the manifest harm to the
Applicants, including potential serious public interest consequences, as discuss ed
above.
[286] The Respondent Banks’ stated main rationale for their unwillingness to provide banking
and payment services to the Applicants, i.e., significant reputational risk, is undermined
by them not having shown consistency in its application. The undisp uted and non -
speculative fact before us is that a number of other companies have been implicated in
serious allegations of misconduct such as alleged state capture and serious allegations
serious allegations of misconduct such as alleged state capture and serious allegations
of corruption.93 Concrete evidence of consistency in approach by the Respondents in
relation to reputational risk would have given their stated case more weight.
[287] Regarding the assessment of the final leg of the test, the balance of convenience, the
CAC in eMedia advised: “In considering the balance of convenience at the interim stage,
the Tribunal has to consider “which of the two parties will suffer the greater ha rm from
the granting or refusal of interim relief, pending a decision on the merits. If there is clear
and non-speculative evidence regarding the general extent of the harm that one party
93 Judicial Commission of Inquiry into State Capture Report: Part 1 paras 1107- 1109 p 441- 443.
72
would suffer if the relief requested is not granted, then the interi m relief ought to be
granted”94 (emphasis added).
[288] The CAC in eMedia further held “If there is a prima facie right, even one open to doubt
and a well-grounded apprehension of irreparable harm if the relief is not granted and
ultimately granted at final relief stage, then the balance of convenience favours the grant
of interim relief”.95
[289] On the issue of parties’ contractual rights in the context of competition law matters ,
competition authorities are duty bound to intervene where any conduct contravenes the
provisions of the Act, and the commercial agreements between parties do not override
that.
[290] We have also s tated that there is no evidence that the Applicants have committed
money laundering, fraud, corruption, or other unlawful or criminal activities.
[291] We further concluded that the Applicant firms have made out a strong case of the
general extent of the significant harm that they would suffer if the relief requested is not
granted, including potential significant adverse effects on the public interest su ch as
employment and empowerment.
[292] Considering the transformative imperatives of the Act, as discussed in these reasons,
and all of the above considerations, we conclude that the harm or prejudice that the
Applicants will suffer if interim relief is not g ranted is greater than the prejudice which
the Respondent Banks will suffer if the interim relief is granted. Therefore, the balance
of convenience favours the Applicants.
[293] For completeness, we also deal below with some specific issues raised by certain
Respondents.
94 eMedia at para 80.
95 eMedia at para 95.
73
ABSA
[294] ABSA in August 2020 decided to terminate its banker-customer relationship with all its
customers who were part of the Sekunjalo Group. There were 24 such customers, 13
of those companies are Applicants in the present case.96
[295] ABSA argues that when it made the decision to close the relevant Applicants bank
accounts97, it did so first, and it was going alone at that stage, and that there was no
scarcity of banking services and no irreparable harm or damage to the Applicants
because they managed to switch bank accounts, and it means that the balance of
convenience overwhelmingly favours ABSA when you apply section 49C to the
allegations against it. 98 The Applicants ague that ABSA is implicated in the anti -
competitive conduct that they complain of.
[296] ABSA further argues that with respect to the abovementioned 13 Applicants, nine of
those voluntarily concluded agreements with ABSA that accepted the validity and
lawfulness of ABSA’s termination of services. They say that those Applicants agreed
that they would be given an extension of time, a six -month period, to move their bank
accounts, and in the course of that settlement agreement accepted the validity and
legality of ABSA’s termination of their services. 99 This is put into dispute by the
Applicants. They argue that they did not understand the six-month extension offer to be
conditional on accepting that the termination was valid and lawful. To the extent that
ABSA interpreted its offer to be conditional, there was no meeting of minds between the
parties. The Applicants also argue that at the time it was not yet evident that the banks
would embark on an (alleged) concerted and collusive effort to unbank the rele vant
entities. We shall further deal with the nine Applicants in relation to which agreements
were reached with ABSA under our assessment of remedies.
[297] ABSA is part of the group of the largest banks in South Africa holding the bulk of the
[297] ABSA is part of the group of the largest banks in South Africa holding the bulk of the
market share. As indicated, the banking sector is furthermore characterized by high
barriers to entry.
96 ABSA Answering Affidavit at paras 101 to 103.
97 Nine of the Applicants used to bank with ABSA.
98 Transcript pages 171 and 172.
99 Transcript pages 174 to 176.
74
[298] The Commission would no doubt investigate the role that Absa played in the alleged
prohibited con duct, given that ABSA was the first to close all the accounts of the
Applicants that banked with ABSA with many other banks following. ABSA’s decision
potentially could be regarded as a form of signaling to the rest of the market.
[299] We see no reason to exclude ABSA altogether from our discretionary decision that it
would be reasonable and just to grant interim relief to the Applicants. (We have
excluded from the interim relief the closure of the bank accounts of the abovementioned
nine Applicants in relation to which agreements were reached with ABSA, as discussed
under remedies). Even if the Applicants’ case was weaker on a (prima facie) prohibited
practice in relation to Absa, which we do not find, that may still be counter-balanced by
a strong case on irreparable harm, which the Applicants in our view have made out.
Sasfin
[300] Sasfin had transactional banking accounts with four of the Applicants: (i) a transaction
account, a resident Rand account and a USD customer foreign currency account for
Orleans Cosmetics (Pty) Ltd; (ii) a resident Rand account and a Euro customer foreign
currency account for ESPAfrika (Pty) Ltd – which accounts were never active because
documents were not provided for FICA verification; (iii) a business transactional banking
account and a business call deposit account for Health System Technologies (Pty) Ltd;
and (iv) a transactional banking account for Magic 828 (Pty) Ltd.100
[301] Sasfin argues that because of its relative size as an emerging player in the market for
transactional banking services in South Africa it does not have the resources to carry
out rigorous ongoing compliance requirements for high risk banking customers. 101 It
also submits that being such a small operation it is trying to grow its market share to
compete with the established banks, and it would not make economic sense for it to
compete with the established banks, and it would not make economic sense for it to
turn away customers unless the cost of servicing those customers would be outweighed
by the revenue that it could earn where those customers pose a high risk that it cannot
within its resources manage.
100 Sasfin Answering Affidavit at para 18.
101 Sasfin submitted that its division is approximately seven years old, that it has only 36 employees, and 12 of
those employees are employed in the foreign exchange trading division, it has only 4 500 customers, and it has
only 0.1% of the market. It also says that it is currently loss-making.
75
[302] The Applicants, on the other hand, argue that the foreign exchange accounts applicable
to Sasfin are vital to the businesses of the Applicants, including Orleans and Magic 828.
Orleans and Magic 828 require access to Sasfin foreign exchange transaction services
to conduct and remain in business.
[303] As indicated above, there is no evidence that the Applicants have committed money
laundering, fr aud, corruption, or other unlawful activities. On the other hand, the
Applicants have made out a strong case of irreparable harm, including potential serious
public interest ramifications. This in our view trumps the compliance costs and staff
issues raised by Sasfin. It therefore is reasonable and just to grant the interim relief in
relation to Sasfin.
Investec
[304] Investec submits that the relevant Respondents held no corporate banking account with
it and that the actual accounts were not used to participate in any market. It submits
that the relevant bank accounts that were terminated were used to pay for Dr Survé’s
personal expenses and personal property acquisitions or to obtain higher interest rates
for the Survé applicants.
[305] The Applicants in their Replying Affidavit do not dispute Investec’s version of what the
relevant accounts were used for. They say that Investec’s conduct implicates Dr Survé’s
rights to equality, human dignity, freedom of association, trade and occupation. The
latter issues on the evidence before us are not issues that appear to fall within our
jurisdiction.
[306] Given that the relevant accounts held with Investec seemingly were used for personal
banking purposes only, the Applicants’ interim relief application in relation to Investec
is dismissed.
Mercantile Bank Ltd
[307] Mercantile Bank Ltd (“MBL”) was cited as the Fifth Respondent in this matter.
Capitec/Mercantile argued that the Sekunjalo Group has cited the wrong respondent102
102 Mercantile Bank Answering Affidavit at paras 76 to 78.
76
since the entity cited, MBL, no longer exists. MBL was deregistered in or about
December 2020.103
[308] Mr Riaan Klopper, the Head of Business Banking and Centralised Operations at
Mercantile Bank, a division of Capitec Bank Ltd, deposed to the Answering Affidavit. He
indicated that since December 2020 MBL is no longer in existence. The corporate and
commercial banking services previously rendered by MBL are now provided by a
division of Capitec, Mercantile Bank (“Mercantile”). Mercantile therefore is the relevant
entity in this matter.
[309] As background, on 15 May 2019, the Tribunal approved a merger between Capitec and
Mercantile Holdings Limited, including its subsidiary, MBL. On 31 December 2020
SARB published the notice of its consent for the transfer of all the assets and liabilities
of MBL to Capitec, and cancellation of the registration of MBL as a bank with effect from
1 December 2020.104
[310] Capitec/Mercantile argued that in light of the wrong citation, no effective relief can be
granted against it. It argued that the Applicants have not sought to correct the citation
in terms of Rule 45(2) of the Rules for the Conduct of Proceedings in the Co mpetition
Tribunal (“the Tribunal Rules”), despite the nonexistence of MBL being raised in answer.
[311] The Applicants in their Replying Affidavit invited the Tribunal to, in terms of section 55
of the Act, condone any non -compliance to the extent that citati on might be raised as
an issue at the hearing.
[312] Capitec/Mercantile argued that the incorrect citation is not a mere “technical irregularity”
that can be condoned under section 55(2) of the Act.
[313] The Applicants argued that the deponent, himself, on behalf of Mercantile says the
correct party is Mercantile, a division of Capitec and therefore this is a most technical
lapse and technical nicety against which the Constitutional Court in Mediclinic
cautioned. They argued that it is the kind of technical, legal sophistry, to quote the
cautioned. They argued that it is the kind of technical, legal sophistry, to quote the
Constitutional Court, that it says must be vigilantly guarded against, and deliberately
flushed out of our justice and economic system. The Applicants asked the Tribunal to
103 Mercantile Bank Answering Affidavit at para 2.
104 Mercantile Bank Answering Affidavit at para read with annexure MB1.
77
condone this technical lapse and grant an order against the party that the deponent
says is the correct party.
[314] When asked by the Chairperson in which capacity they are present in the proceedings,
Ms Engelbrecht appearing for Capitec/Mercantile responded as follows: “ Chair, so we
are here on the assumption or on t he possibility rather that the tribunal overlooks the
difficulty with citation of a party that does not exist in a sense Mercantile, that division
which now forms part of Capitec, is of course in consequence of a decision first of the
tribunal to allow the merger, and then the regulations under the Banks Act, what
previously was Mercantile Bank Ltd now forms part of Capitec, and on the off chance
the tribunal is willing to overlook the problems of juristic personality, I represent the
interests of Capitec that encompass those of Mercantile.”105
[315] The relevant services that relate to the Application clearly are the banking services
provided by Mercantile, a division of Capitec, that previously were provided by MBL
prior to the abovementioned merger. Mercantile currently provides banking services,
i.e., a forex trade account, to one of the Applicants, Health System Technologies (Pty)
Ltd, the Fourteenth Applicant.106
[316] Section 55(2) of the Act provides that the Tribunal may condone any technical
irregularities arising in any of its proceedings. 107 This confers on the Tribunal a wide
discretion in managing and conducting its proceedings. This position was confirmed by
the Constitutional Court in Senwes “One of the functions of the Tribunal is to adjudicate
on any conduct prohibited under Chapter 2 of the Act. In order to do so, the provisions
for hearings referred to the Tribunal place an emphasis on speed, informality and a non-
technical approach to its task.[...] Excessive formality would not be in keeping with the
purpose of the Act”.108 Furthermore, in terms of section 53 of the Act the Tribunal must
purpose of the Act”.108 Furthermore, in terms of section 53 of the Act the Tribunal must
conduct its hearings as expeditiously as possible and furthermore as informally as
possible. Again, the Constitutional Court in Senwes affirms this as it states: “This section
gives the Tribunal freedom to adopt any form it considers proper for a particular hearing,
which may be formal or informal. Most importantly, it also authorises the Tribunal to
adopt an inquisitorial approach to a hearin g.“109 It would in our view have not been
efficient and expeditious for the Tribunal to in these specific circumstances have
105 Transcript page 212.
106 Mercantile Answering Affidavit at para 26.
107 Also see Tribunal Rule 55(3).
108 Senwes at para 69.
109 Senwes at para 50.
78
required the Applicants to bring a formal amendment application to rectify the
misdescription of the Respondent. This would have meant postponing the hearing for
the formality of the amendment application. This would have had cost implications for
all parties concerned, including all other Respondents who were ready to argue their
cases before the Tribunal.
[317] Furthermore, we considered that, given that we must conduct ou r hearings
expeditiously and informally, not requiring the formality of amendment application in
these circumstances was appropriate since there was no apparent prejudice to
Mercantile. Not requiring the formality of a formal amendment application to be brought
did not deprive Mercantile of a fair hearing or a defence which would otherwise have
been available to it. Capitec/Mercantile had answered the main application, was legally
represented, and was furthermore ready to argue on behalf of Capitec encompas sing
Mercantile.
[318] Given the above, we condone the misdescription in the application and our order is
made in relation to Mercantile Bank, a division of Capitec.
Is it reasonable and just to grant interim relief?
[319] The Respondent Banks made it abundantly clear that they do not express a view
regarding the veracity or otherwise of the malfeasance allegations in the Mpati
Commission Report, and that they closed the accounts simply on perceived reputational
risk.
[320] The Tribunal is called upon to objectively assess, for interim relief purposes, if the state
of competition in markets should be preserved or altered until the final determination of
the Commission’s investigation and whether in the circumstances of the case in its
discretion it would be reasonable and just to grant the interim relief.
[321] In Wilec110, the Tribunal found in interim relief proceedings against Allbro, based on a
defence of unproven copyright claims by Allbro which were pending in the High Court,
defence of unproven copyright claims by Allbro which were pending in the High Court,
that it was reasonable and just to grant interim relief pending the final determination of
110 Makarenge Electrical Industries (Pty) Ltd t/a Wilec v Allbro (Pty) Ltd & Competition Commission of South Africa
IR095Oct21.
79
the competition complaint because the prejudice to the applicant was greater than it
was to Allbro.
[322] While in contract law Bredenkamp may entitle the Respondent Banks to terminate a
banking relationship without reasons, unilaterally, and on reputational risk (an
interpretation disputed by the Applicants), this does not trump compliance by the banks
with competition law.
[323] Where the exercise of a private commercial right does not cause competition harm then
Bredenkamp and the Act may well be aligned, and the banks’ closure of the bank
accounts would be of no consequence competition-wise. However, where there is harm
to competition then competition author ities are obligated to intervene. Normandien,
provides a basis and authority for this. It states “while certain conduct can conceivably
constitute both a breach of contract and a prohibited practice in terms of the Act, they
are certainly not dependent on one another. One cannot assume that a breach of
contract necessarily constitutes a competition law violation and vice versa…this nexus
between competition and contract has to be proven.”111
[324] The main issue of contention during the hearing was whether a prohibited practice, on
a prima facie basis, had been established. The Respondent Banks argued that the
Applicants had made no cognisable case of a prohibited practice because they (the
Respondents) do not compete with the Applicants in any relevant market and therefore
their closure of the b ank accounts, independently of one another cannot conceivably
extend, preserve, or create market power in any market in which the banks operate. Put
differently this is not a case where the banks are alleged to be leveraging market power
in one market to advantage themselves in another market.
[325] The Respondent Banks further submitted that the Applicants have failed to show harm
to the competitive process rather than individual harm to the respective Applicants.
to the competitive process rather than individual harm to the respective Applicants.
[326] However, since the hearing, the CAC in eMedia has evolved the jurisprudence on the
approach to interim relief applications under section 49(C) and has reminded the
Tribunal to apply a transformative constitutional and context sensitive approach,
consistent with the scheme of the Act.
111 Normandien Farms (Pty) Ltd v Komatiland Forests (Pty) Ltd (018507) [2014] ZACT 31 (4 June 2014) at para
19.
80
[327] The transformative goals of the Act, the CAC in eMedia found, are reinforced by the
various definitions in the Competition Amendment Act “…making them wider and
ensuring closer consistency with the transformative goals of the Competition Act. ”
Specifically, when considering an exclusionary act (and more broadly, at other
provisions of the Act), consideration ought to be given to the meaning of participate
which is defined as “the ability or opportunity for firms to sustain th emselves in the
market”.112
[328] In their founding affidavit, the Applicants raise squarely their sustainability as they claim
that “the continued survival of the applicants (and competition within the markets in
which they operate ) …Without banking and payment services, the applicants would
ultimately cease to trade, effective competition within the markets in which they operate
will be eliminated. This will reverse some of the transformational gains in the media,
ICT, healthcare and fishing sectors.”113
[329] Since the Respondent Banks’ rebuttal of the Applicants’ case during the hearing centred
primarily on competitive harm, the Respondent Banks did not seriously contest the
Applicants’ ability to sustain themselves in the transformative manner contemplated i n
eMedia.
[330] In regard to proving harm, the CAC in eMedia held that “The balance between
competition harm and commercial harm …in interim relief requires an objective
approach. Competition jurisprudence requires an approach that looks beyond the
entitlement of a dominant firm to decide with whom they wish to do business and that
the terms of their business dealings must be unfettered.”114
[331] Significantly, the CAC reminds us in eMedia of the trite principle that “If there is clear
and non-speculative evidence regarding the general extent of the harm the one party
would suffer if the relief requested is not granted, then interim relief ought to be granted”,
would suffer if the relief requested is not granted, then interim relief ought to be granted”,
and further that “if there is a prima facie right, even one open to some doubt and a well-
grounded apprehension of irreparable harm if the relief is not granted and ultimately
112 eMedia at para 90.
113 Founding Affidavit at para 207.
114 eMedia at para 96.
81
granted at final relief stage, then the balance of convenience favours the grant of the
relief.”115
[332] Given the guidance of the CAC in the eMedia judgement, as shown by our assessment
on the evidence relating to the alleged prohibited practice, we were persuaded by the
Applicants’ evidence on harm to competition in the markets in which they operate and
their inability to sustain themselves in those markets, absent the bank accounts.
[333] As shown in our assessment of the need to prevent irreparable harm and the balance
of convenience, we were further persuaded by the prejudice to the Applicants without
interim relief, given the extent of irreparable harm if they cannot sustain themselves in
their markets.
[334] For the above reasons we conclude that in this case is it reasonable and just to grant
interim relief to the Applicants.
Relief sought
[335] In essence, the Applicants sought an interdict preventing the Respondents (specifically
Nedbank and Standard Bank) from closing the respective bank accounts held by the
Applicants with these two banks and preventing the m from unilaterally changing the
terms and conditions attached to the accounts. In respect of the remaining
Respondents, the Applicants seek that the Respondents be ordered to restore the bank
accounts which were closed by the Respondents on the same terms and conditions as
applicable prior to the closure of the accounts.
[336] The precise terms of the relief sought is:
“2. Pending the final determination by the Competition Commission (th e
Commission), the Tribunal or the Competition Appeal Court (CAC) (as the case
may be), of the complaint initiated by the applicants at the Commission under
Case Number 2021Dec0031 on 17 December 2021, the First and Second
Respondents are prohibited from:
115 eMedia at para 95.
82
2.1. closing the bank accounts of the applicants, which c onstitute a
scarce resource or service to the applicants, and
2.2. in any way unilaterally changing the terms and conditions attaching
to the bank accounts that the applicants hold with the first respondent.
3. Pending the final determination by the Commission, the Tribunal or the CAC
(as the case may be), of the complaint initiated by the applicants at the
Commission under Case Number 2021Dec0031 on 17 December 2021, the
third, fourth, fifth, sixth, seventh, eighth and ninth respondents are directed to:
3.1. restore all the bank accounts of the applicants, including all
services that the second, third and fourth respondents provided to the
applicants, which bank accounts and services constitute a scarce
resource or service to the applicants,
3.2. restore the terms and conditions that attached to the bank accounts
that the applicants held with the second, third and fourth respondents
before they were closed or terminated,
3.3. desist from terminating the bank accounts of the applicants for any
reason not sustainable in law, and
3.4. desist from unilaterally changing the terms and conditions tha t
attach to the applicants’ bank accounts and/or service.
4. Costs of this application in the event of opposition.”
[337] The Respondent Banks resisted the relief sought generally on grounds that the relief
was extraordinary as it would force them into a contractual relationship with a party that
poses significant risk to them which they argued would be contrary to the Supreme
Court decision in Bredenkamp that confirms that a bank may terminate a contractual
relationship with a client if the client poses a risk to the bank (as indicated, this
interpretation of Bredenkamp is disputed by the Applicants) . They also raised some
specific issues relevant to each of them, as we discuss below.
83
[338] Nedbank submits that the relief sought would bind it into an indefinite contract contrary
to the Bredenkamp decision.116 Nedbank also claims that certain of the accounts
alleged to be held with it were not. The Ayo account (Thirteenth Applicant) is held with
a Nedbank entity in Lesotho, which is a separate legal entity, and which was not before
us in the se proceedings.117 We thus find it appropriate to exclude the bank accounts
held by the Thirteenth Applicant from any Order as the Nedbank entity in Lesotho is not
cited as a respondent to this application nor did it participate in the proceedings.
[339] Further we note that the First Applicant, Dr Surve, had accounts with Nedbank. These
accounts however were of a personal nature and therefore have no apparent bearing
on the ability of the Sekunjalo Group being able to compete and/or sustain itself in the
markets in which it competes . Thus any personal accounts held with the Respondent
Banks that are unrelated to any business activities are excluded from our Order.
[340] Recall that at the time of the hearing, Standard Bank had not closed the relevant
Applicants’ accounts held with it. It submitted that if interim relief were to be granted, it
would place Standard Bank in an invidious position as Standard Bank would in essence
be in breach of domestic or international standards imposed on it and it would result in
Standard Bank facing risks of prosecution and criminal sanctions, in both South Africa
and abroad. Furthermore, that granting relief would also offend the purpose of the Act
to “promote the efficiency of the economy”.
[341] Standard Bank also raised flaws with the relief sought by the Applicants. It pointed out
that in the Notice of Motion at paragraph 2.1, the relief sought by the applicants against
Standard Bank was for it not to close existing bank accounts and went no further i.e., it
did not require Stand ard Bank to open new accounts or entertain additional services
did not require Stand ard Bank to open new accounts or entertain additional services
whereas the relief sought in the founding affidavit encompasses this. 118 Further,
Standard Bank submitted that the relief sought in the Notice of Motion at paragraph 2.2
is sought only against Nedbank (who at the time of filing the application, like Standard
Bank, were the only two banks that had not closed the Applicants’ bank accounts).
Standard Bank was of the view that the contradictory nature of this prayer was a
fundamental flaw in the Application.
116 Nedbank Answering Affidavit at para 29.
117 Nedbank Answering Affidavit at para 125.
118 Standard Bank Answering Affidavit at para 11.2.
84
[342] In our view, the omission in paragraph 2.2 of the Notice of Motion is an error which we
can condone in terms of section 55 (2) of the Act. Paragraph 2.1 expressly mentions
Standard Bank, it would therefore follow that the sub -paragraph 2.2 of the Notice of
Motion which only mentions Nedbank should apply to Standard Bank too. As discussed
above, section 55(2) confers a wide discretion on the Tribunal in the conduct of
proceedings which was affirmed by the Constitutional Court in Senwes when it held that
“...the provisions for hearings in the Tribunal place emphasis on speed, informality and
a non-technical approach to its task.”119 There is no prejudice to Standard Bank since it
made its submissions regarding the flaws in the A pplicants case and it is logical that
paragraph 2.2 should apply to Standard Bank.
[343] Standard Bank further avers that the relief sought is unqualified despite the fact that
there may be circumstances in which the bank is justified in closing the accounts. 120
Standard Bank raised concerns regarding imposing an obligation on it to deal with
clients for whom it has no risk-appetite or to take on new customers, both of which would
impinge on its autonomy and ability to carry on its business in the ordinary course, as
an independent commercial entity that is active in the market. We have already dealt
with reputation as a justification and concluded, for the reasons discussed, that it does
not hold . We have als o, as affirmed by the CAC in eMedia, looked beyond the
entitlement of Standard Bank to decide with whom it wishes to do business , since it
prima facie has market power and its conduct has been shown to cause harm to
competition and irreparable harm to the Applicants . We have thus found these
arguments by Standard Bank unpersuasive. We have found no basis to require
Standard Bank (or any of the Respondents) to open new accounts or to provide
additional services not previously provided. In our view, it would be far reaching to
additional services not previously provided. In our view, it would be far reaching to
require Standard Bank to open new accounts or provide new services since no prior
existing terms and conditions exist. Such an order would require commercial negotiation
between the Applicants and Standard Bank which in our view is not justified in this case.
[344] ABSA which was the first to close the accounts, submits that the status quo that ought
to be preserved is one where the Applicants no longer have accounts with ABSA. It
submits that it was impermissible for the Applicants to ask the Tribunal to force ABSA
to reopen accounts with the Applicants since this would be a reversal of the status quo
without a lawful or factual basis. Such relief, ABSA submitted was not in the nature of
119 Senwes at para 69.
120 Standard Bank Answering Affidavit at para 102.
85
typical interim relief contemplated under section 49C as the relief sought requires the
Tribunal to create commercial relationships and arrangements in circumstances where
they do not exist.121
[345] We noted earlier, with respect to ABSA, that nine of the Applicants accepted an offer of
a six-month extension of the subsistence of their accounts prior to their closure. From
this it is clear, with respect to these nine accounts, that their closure was agreed to by
the nine Applicants, therefore these accounts are excluded from our Order. For
completeness, the nine Applicants are the Sixth, Ninth, Tenth, Eleventh, Twelfth,
Thirteenth, Fourteenth, Twenty-Eighth, and Thirty-Fifth Applicants.122
[346] First Rand submits that the closure of the relevant bank accounts held with it arose at
the very latest in July 2021. It argued, like ABSA that this was not a situation where
there is a threat of imminent closure and where there is a need for intervention to
maintain the st atus quo until the matter is finally determined, because the accounts
have already been closed. In its answering affidavit, First Rand submits that it would be
materially prejudiced if it were forced to re-provide banking services to the Third, Fourth,
Fifth, Seventh, Eighth, Thirteenth, Twenty -Fourth and Twenty -Eighth Applicants, and
this may lead to a loss of revenue, regulatory or legislative action, a loss of existing and
potential client business and a reduction in its ability to retain employees. 123 It further
alleges that since no allegations are made by the Applicants contesting the closure of
the Third, Fourth, Fifth, Seventh, Eighth, Twenty-Fourth and Twenty-Eighth Applicants
(but only against the Thirteenth), there is no issue with the closure of these accounts.124
In reply the Applicants disputed that only one account closure was placed in dispute ;
the Applicants stated: “Banking and payment services are the lifeblood of any corporate
the Applicants stated: “Banking and payment services are the lifeblood of any corporate
citizen. It is immaterial that the Thirteenth and other applic ants did not state th e
termination was critical to its business. ”125 We thus find it appropriate that our Order
relates to all the accounts in dispute regarding First Rand.
[347] First Rand alleges that the Thirteenth Respondent (Ayo Technology Solutions Ltd)
brought urgent proceedings in the Gauteng Division of the High Court (Part A) and in
Part B sought a declarator that the termination clause was unconstitutional or unlawful,
or alternatively, seeking the High Court to change the common law that enables the
121 ABSA Answering Affidavit at para 21.
122 ABSA Answering Affidavit at para 18.
123 First Rand Answering Affidavit at para 100.
124 First Rand Answering Affidavit at para 18.
125 Replying Affidavit at para 551.
86
termination of a banking relationship on reasonable notice. The High Court dismissed
Part A (dealing with urgency). First Rand points out that the Thirteenth Respondents
has not taken any steps to proceed with Part B since the Thirteenth Respondent is
presumably aware that that it has no prospects of success.126
[348] Mercantile Bank submits in its answering affidavit that it provides a forex trading account
to Health System Technologies, the Fourteenth Applicant. It appears that this account
is still open .127 Mercantile further submit s that it was approached by AEEI to open a
business account and following its risk assessment, declined to open the account. 128
Mercantile submitted that it cannot restore bank accounts where no services were
provided and that it would be prejudiced were it to be ordered to open a new account
to a client that it considers posing reputational risk. The ongoing due diligence on high-
risk clients is costly and imposes a significant risk burden.129 It however, transpired from
the papers and the hearing that Mercantile still had one account open. Accordingly, our
order with respect to Mercantile relates to this account and it is to keep the account
open rather than to open a closed account as per the Applicants’ Notice of Motion.
[349] Sasfin added that the relief sought against it is extremely far -reaching and highly
prejudicial and if it were to be granted, Sasfin would be compelled to take on additional
employees at significant additional cost to ensure compliance with its risk policies.
Sasfin submitted that it was the smaller of the banks and employs only has 36
employees, and 12 of those employees are employed in the foreign exchange trading
division. It has only 4 500 customers, and it has only 0.1% of the market and is, in fact,
as loss-making.130
[350] The Eight Respondent, ESP Africa, approached Sasfin for banking services , more
specifically, a resident Rand account and a Euro currency account. However, it is
specifically, a resident Rand account and a Euro currency account. However, it is
undisputed that ESP Africa failed to provide the necessary documentation to Sasfin to
enable Sasfin to comply with the “Know Your Customer” requirements in terms of FICA.
ESP Africa’s accounts were thus blocked by Sasfin from the outset. 131 As this account
was never operational, and blocked since inception, we find it appropriate to exclude it
from our Order.
126 First Rand Answering Affidavit at paras 20 – 24.
127 Mercantile Answering Affidavit at para 26.
128 Mercantile Answering Affidavit at para 27.
129 Mercantile Answering Affidavit at para 76.
130 Transcript page 216.
131 Sasfin Answering Affidavit at para 18.2.
87
[351] Access Bank provided banking services to only one of the Applicants, Afrinat (Pty) Ltd,
the Fourth Applicant.132 This account was closed on 02 July 2021. It submitted that the
relief sought to interdict the closure of the account, and the relief not to change the
terms and conditions in terms of which the banking services were provided, is
incompetent.133 The only relevant relief is to restore the closed bank account (and cost
order). It submits in argument that this was not a competition law related matter, and
further that the implication of York Timbers is that, where a dispute has less to do with
competition law and is better characterised as a contractual dispute, it should be heard
in another forum, not in the Tribunal.134
[352] Bidvest did not respond to the application, nor did it attend proceedings. However, the
Tribunal obtained a copy of return of service from the Sheriff regarding the Founding
Affidavit served by the Applicants, confirming that the Founding Affidavit was received
by Bidvest. Further, the Tribunal physically delivered its notice of setdown for the
hearing of this matter to Bidvest, rece ipt of the notice of set down was acknowledged
by Bidvest. According to the Applicants, Bidvest provides banking services to Orleans
Cosmetics (Pty) Ltd, the Seventh Applicant. 135Bidvest furthermore refused to provide
banking services when approached by the Applicants.136 Bidvest had one account open
at the time of the hearing. Accordingly, our order with respect to Bidvest relates to this
account and it is to keep the account open rather than to open a closed account as per
the Applicants’ Notice of Motion.
Our assessment
[353] We have already dealt with the requirements and jurisprudence under section 49C for
the grant of interim relief. In this section we reiterate the following principles which are
trite and have guided our conclusions regarding the order granted.
trite and have guided our conclusions regarding the order granted.
[354] As Unterhalter J held in Business Connexion, the purpose of interim relief goes beyond
maintaining the status quo. It is a regulatory competence in terms of which “the Tribunal
is empowered to regul ate how competition is to take place for a six to twelve month
period. [It is] a different competence to that of a court adjudicating a dispute of right”. It
132 Access Bank Answering Affidavit at para 12.
133 Access Bank Answering Affidavit at para 17.
134 Access Bank Heads of Argument at paras 61 and 76.
135 Founding Affidavit, para 237.
136 Founding Affidavit, paras 124 and 232.
88
alters the status quo and is “ intended to change the way firms compete in the market
with consequences that may well resonate between markets”.137
[355] We therefore find the Respondent Banks’ arguments that the relief sought against the
banks that had already closed the bank accounts is incompetent, contrary to the
purpose of interim relief. As held by the CAC, interim relief extends beyond maintaining
the status quo and empowers the Tribunal to regulate how competition is to take place
for an interim period. This means the alleged status quo of closed bank accounts can
be reversed in order to safeguard competition for a period of six months from the date
of the interim relief order or the conclusion of the hearing into the alleged prohibited
practice, whichever is the earlier.
[356] Further, to allow the Respondent Banks to unilaterally alter the previous terms and
conditions of the banking services they provided, would undermine the effectiveness of
the interim relief remedy. We furthermore note that the interim relief is for a limited
period of time and is not final relief.
[357] Standard Bank had the accounts still open at the time of the hearing. Our order is given
on that basis.
[358] Regarding relief related to (potential) requests by the Applicants for the Respondent
Banks to open new bank accounts that did not previously exist, as well as regarding
(potential) requests by the Applicants for the provision of additional services by the
Respondent Banks that were not previously provided to them, for example, Standard
Bank provided that “In the interim no new entities would be on -boarded by Standard
Bank, and any additional business requests would be carefully scrutinised”138 during its
review of the accounts, no compelling arguments have in our view been made by the
Applicants to warrant this in the circumstances of this interim relief case. Similarly,
ABSA state that “most of the Applicants never had accounts with ABSA and can thus
ABSA state that “most of the Applicants never had accounts with ABSA and can thus
clearly have no claim for the “restoration” of their accounts with ABSA”139. For the sake
of clarity, our Order thus excludes the opening of any new bank accounts by the relevant
Respondent Banks that did not previously exist, as well as the provision of any
additional services by the Respondent Banks that were not previously provided to the
relevant Applicants.
137 Business Connexion at para 17.
138 Standard Bank Answering Affidavit at para 112.4.
139 ABSA Answering Affidavit at para 18.
89
[359] In our view, the discrepancies raised by Standard Bank regarding the order sought in
the Notice of Motion and the founding affidavit are not material, and in terms of section
55(2) we condone any technicalities in this regard for the reasons discussed above.
[360] Finally, for completeness and for purposes of our Order , we shortly summarise the
accounts that are excluded from our Order:
360.1. The account held by the Thirteenth Applicant with the non -cited Nedbank
Lesotho (see paragraph 338);
360.2. The personal accounts held by the First Applicant with Nedbank (see paragraph
339);
360.3. The nine Applicants, being the Sixth, Ninth, Tenth, Eleventh, Twelfth, Thirteenth,
Fourteenth, Twenty -Eighth, and Thirty -Fifth Applicants, who accepted a
conditional six-month extension prior to the closure of their accounts by ABSA
(see paragraph 345);
360.4. The blocked account of the Eighth Applicant held with Sasfin (see paragraph
350); and
360.5. The accounts held by the First, Second, Third, Twenty-Second, and Thirty-Third
Applicants with Investec (see paragraphs 304 - 306).
[361] Furthermore, we decline to grant an order in respect of the First Applicant’s personal
accounts, and in respect of any new bank accounts or additional services.
90
ORDER
1. For a period of six months from the date of this order, or the conclusion of the investigation
by the Commission into the complaint filed by the Applicants under case number
2021Dec0031, whichever is the earlier:
1.1. Nedbank is to reinstate /restore the bank accounts including all services that it
provided to the Applicants that held accounts with it, save for the exclusions detailed
in paragraph 360.1 and 360.2 on the same terms and conditions as existed prior to
the closure/termination of the accounts.
1.2. Standard Bank is interdicted from closing the bank accounts of the Applicants that
hold accounts with it, and in any way unilaterally changing the terms and conditions
that attach to the accounts and/or services provided.
1.3. ABSA is to reinstate/restore the bank accounts including all services that it provided
to the Applicants that held accounts with it , save for the exclusi ons detailed in
paragraph 360.3 on the same terms and conditions as existed prior to the
closure/termination of the accounts.
1.4. First Rand is to reinstate /restore the bank accounts including all services that it
provided to the Applicants that held accounts with it, on the same terms and conditions
as existed prior to the closure/termination of the accounts.
1.5. Mercantile Bank, a division of Capitec Bank Ltd is interdicted from closing the bank
account of Health System Technologies (Pty) Lt d, the Fourteenth Applicant, and in
any way unilaterally changing the terms and conditions that attach to the account
and/or services provided.
1.6. Sasfin is to reinstate/restore the bank accounts including all services that it provided
to the Applicants that held accounts with it , save for the exclusions detailed in
paragraph 360.4, on the same terms and conditions as existed prior to the
closure/termination of the accounts.
1.7. There is no order pertaining to Investec.
91
1.8. Access Bank is to reinstate /restore the bank account including all services that it
provided to Afrinat (Pty) Ltd, the Fourth Applicant, on the same terms and conditions
as existed prior to the closure/termination of the account.
1.9. Bidvest is interdicted from closing the bank account of Orleans Cosmetics (Pty) Ltd,
the Seventh Applicant, and in any way unilaterally changing the terms and conditions
that attach to the account and/or services provided.
2. There is no order as to costs.
16 September 2022
Ms Mondo Mazwai
Date
Prof. Liberty Mncube
Mr Andreas Wessels
Case Manager
: Kameel Pancham
For the Sekunjalo Group
: Adv. V Ngalwana SC, Adv. F Karachi, Adv. E
Richards and Adv. K Monareng instructed by
Ndzabandzaba Attorneys and Refiloe Mokoena
Attorneys
For Nedbank
: Adv. A Cockrell SC and Adv. Z Minty instructed by
ENSafrica
For Standard Bank
: Adv. S Budlender SC and P Ngcongo instructed by
Herbert Smith Freehills
Reason:Witnessing Andreas Wessel We
Signed by:Andreas Wessel Wessels
Signed at:2022-09-16 16:17:38 +02:00
92
For First Rand Bank : Adv. P Bosman instructed by Norton Rose Fulbright
For ABSA Bank
: Adv. MM Le Roux SC, Adv. HW van Eetveldt, and
Adv. J Chanza instructed by Webber Wentzel
For Mercantile Bank
: Adv. MJ Engelbrecht SC and Adv. L Quilliam
instructed by Werksmans Attorneys
For SASFIN Bank
: Adv. L Kelly instructed by ENSafrica
For Investec Bank
: Adv. K Hofmeyr SC and Adv. L Sisilana instructed by
ENSafrica
For Bidvest Bank
: No Appearance
For Access Bank
: Adv. T Marolen instructed by Lawtons Africa
For the Commission
: Maya Swart, Bukhosibakhe Majenge, and Luke
Rennie
93
Annexure “A”
SEKUNJALO / BANKS RELATIONSHIP
FIRST RESPONDENT: NEDBANK LIMITED
No Applicant Closure date
1 First Applicant Dr Mohammed Iqbal Surve 15 February 2022
2 Second Applicant Sekunjalo Investment Holdings
(Pty) Ltd
15 March 2022
3 Third Applicant African Equity Empowerment
Investment Ltd
15 March 2022
4 Sixth Applicant Sekpharma (Pty) Ltd 15 March 2022
5 Ninth Applicant Premier Fishing & Brands Ltd 9 May 2022
6 Tenth Applicant Premier Fishing SA (Pty) Ltd 9 May 2022
7 Eleventh Applicant Marine Growers (Pty) Ltd 9 May 2022
8 Twelfth Applicant Talhado Fishing Enterprises (Pty)
Ltd
9 May 2022
9 Fifteenth Applicant Global Command & Control
Technologies (Pty) Ltd
15 March 2022
10 Sixteenth Applicant Kalula Communications (Pty) Ltd 15 March 2022
11 Seventeenth Applicant Kathea Communications (Pty) Ltd 15 March 2022
12 Eighteenth Applicant Sekunjalo Properties (Pty) Ltd 15 March 2022
13 Nineteenth Applicant 3 Laws Capital SA (Pty) Ltd 15 March 2022
14 Twentieth Applicant Cape Sunset Villas (Pty) Ltd 15 March 2022
15 Twenty-First Applicant Silo Cape Waterfront Property
Investment (Pty) Ltd
15 March 2022
16 Twenty-Second
Applicant
Africa News Agency (Pty) Ltd 15 March 2022
17 Twenty-Third Applicant South African Press Association
(Pty) Ltd
15 February 2022
18 Twenty-Fifth Applicant Independent Newspapers (Pty)
Ltd
15 February 2022
19 Twenty-Sixth Applicant Independent Media Consortium
(Pty) Ltd
15 March 2022
20 Twenty-Seventh
Applicant
Sagarmatha Technologies (Pty) Ltd 15 March 2022
21 Twenty-Eighth Applicant Loot Online (Pty) Ltd 15 March 2022
22 Twenty-Ninth Applicant Surve Philanthropies (NPC) 15 February 2022
23 Thirtieth Applicant Sekunjalo Development
Foundation Trust
15 March 2022
24 Thirty-First Applicant Dr Iqbal Surve Bursary Trust 15 March 2022
25 Thirty-Second Applicant The Social Entrepreneurship
Foundation Trust
15 February 2022
25 Thirty-Second Applicant The Social Entrepreneurship
Foundation Trust
15 February 2022
26 Thirty-Third Applicant Haraas Trust 15 March 2022
28 Thirty-Fourth Applicant Linacre Investments (Pty) Ltd 15 February 2022
28 Thirty-Sixth Applicant Business Venture Investments
1126 (Pty) Ltd
15 March 2022
94
SECOND RESPONDENT: STANDARD BANK
Under review
NO Applicant
1 Seventh Applicant Orleans Cosmetics (Pty) Ltd
2 Twenty-Fifth Applicant Independent Newspapers (Pty) Ltd
3 Twenty-Eighth Applicant Loot Online (Pty) Ltd
THIRD RESPONDENT: FIRST RAND BANK
No Applicant Closure date
1 Third Applicant African Equity Empowerment
Investment Ltd
21 June 2021
2 Fourth Applicant Afrinat (Pty) Ltd 21 June 2021
3 Fifth Applicant Bioclones (Pty) Ltd 19 July 2021
4 Seventh Applicant Orleans Cosmetics (Pty) Ltd 25 June 2021
5 Eighth Applicant ESP Africa (Pty) Ltd 25 June 2021
6 Thirteenth Applicant Ayo Technology Solutions Ltd 3 May 2021
7 Fourteenth Applicant Health Systems Technologies
(Pty) Ltd
29 October 2021
8 Twenty-Fourth Applicant Magic 828 (Pty) Ltd 19 July 2021
9 Twenty-Eighth Applicant Loot Online 30 June 2021
FOURTH RESPONDENT: ABSA BANK
No Applicant Closure date
1 Fourth Applicant Afrinat (Pty) Ltd 26 November 2020
2 Fifth Applicant Bioclones (Pty) Ltd 26 November 2020
3 Sixth Applicant Sekpharma (Pty) Ltd 26 February 2021
4 Ninth Applicant Premier Fishing & Brands Ltd 26 February 2021
5 Tenth Applicant Premier Fishing SA (Pty) Ltd 26 February 2021
6 Eleventh Applicant Marine Growers (Pty) Ltd 26 February 2021
7 Twelfth Applicant Talhado Fishing Enterprises
(Pty) Ltd
27 February 2021
8 Thirteenth Applicant Ayo Technology Solutions Ltd 26 February 2021
90 Fourteenth Applicant Health Systems Technologies
(Pty) Ltd
26 February 2021
10 Eighteenth Applicant Sekunjalo Properties (Pty) Ltd 26 February 2021
11 Twenty-Fourth Applicant Magic 828 (Pty) Ltd 26 February 2021
12 Twenty-Eighth Applicant Loot Online (Pty) Ltd 26 February 2021
13 Thirty-Fifth Applicant Kilomax Investments (Pty) Ltd 26 February 2021
95
FIFTH RESPONDENT: MERCANTILE BANK
No Applicant Closure date
1 Fourteenth Applicant Health System Technologies
(Pty) Ltd
Active
SIXTH RESPONDENT: SASFIN BANK
No Applicant Closure date
1 Seventh Applicant Orleans Cosmetics (Pty) Ltd 22 February 2022
2 Eighth Applicant ESP Africa (Pty) Ltd Blocked since
inception
3 Fourteenth Applicant Health System Technologies
(Pty) Ltd
24 February 2022
4 Twenty-Fourth Applicant Magic 828 (Pty) Ltd 02 December 2021
SEVENTH APPLICANT: INVESTEC BANK
NO Applicant Closure
1 First Applicant Dr Muhammed Iqbal Surve 31 May 2021
2 Second Applicant Sekunjalo Investments
Holdings (Pty) Ltd
31 May 2021
3 Third Respondent African Equity Empowerment
Investment Ltd3
1 May 2020
4 Twenty-Second
Applicant
African News Agency (Pty) Ltd 31 May 2021
5 Thirty-Third Applicant Haraas Trust 31 May 2021
EIGHTH RESPONDENT: BIDVEST BANK
No Applicant Closure date
1 Seventh Applicant Orleans Cosmetics (Pty) Ltd Active
NINTH RESPONDENT: ACCESS BANK
No Applicant Closure date
1 Fourth Applicant Afrinat (Pty) Ltd 2 July 2021