The Competition Appeal Court has given the Competition Commission 40 days to panel beat allegations of currency manipulation by 16 non-SA domiciled banks into a case that will pass legal muster.

A Moneyweb report says the ruling – largely supportive of the commission but unhappy with its haphazard approach – was given in response to an appeal by the 16 banks of a Competition Tribunal decision issued last June. The latest ruling – in a case that has dragged on for five years without coming close to tackling the substance of the allegations – deals with crucial challenges to the local competition authorities’ jurisdiction.

‘This appeal concerns the vital question as to the scope of the respondent (the Competition Commission) in enforcing the vision of the Competition Act as formulated and passed by the democratically elected Parliament of this country,’ said Dennis Davis, Judge President of the CAC.

One competition lawyer described the CAC ruling as ‘a brave attempt to bring the law into line with reality’ but said it might not survive an expected appeal to the Constitutional Court. Assuming it is not overturned by the Constitutional Court, the CAC decision could help to develop the law to reflect the realities of economic globalisation in the 21st century.

As things stand, the 16 banks are relying on centuries-old common law, applied across the globe, to shelter from any action by the SA regulators.

The Moneyweb report notes it is referred to as peregrini status and the 16 banks are claiming they enjoy this status, which means the SA competition authorities have no jurisdiction over them.

‘The rapid globalisation of markets has challenged the ability of the nation-state to pursue policies borne of indigenous democratic choice,’ said Davis, adding ‘multinational corporations are often more powerful than nation-states and can strategically comport their economic behaviour to avoid national regulation.’

In its 2019 ruling, the tribunal did not challenge the peregrini status but said the commission could request a reputationally damaging declaratory order against the 16 banks for being part of a cartel.

The commission wasn’t satisfied with that, it appealed to the CAC because it wanted the tribunal to change the common law as it impacted the Competition Act. It also wanted the Act’s jurisdiction to extend to parties that may not be physically resident in SA but who ‘carry on economic activities that have an effect in SA’.

Moneyweb says the CAC ruling opens the way for that to now happen.

Full Moneyweb report