FirstRand may well find itself on the hook for a costly penalty over alleged anticompetitive behaviour involving its vehicle financing subsidiary, WesBank.

As previously reported, the Competition Commission announced on 3 February that it had referred FirstRand, WesBank and Toyota Financial Services SA (TFS-SA) to the Competition Tribunal for prosecution due to alleged collusive behaviour.

It also said it had asked the tribunal to fine the companies 10% of their turnover. A 10% fine on FirstRand’s turnover would be in the region of R10bn if one uses the R109.5bn total revenue figure cited in the group’s 2021 integrated report.

A Business Day report says though FirstRand does not disclose WesBank’s turnover figures in its results, it is safe to assume it is far smaller given that it is a subsidiary, while TFSSA’s would be smaller still.

Yet the details of the case contain a considerable number of devils, thanks to a confusing and poorly drafted statement by the commission.

Neither the commission nor FirstRand were keen on clearing up the confusion when contacted, says Business Day.

Ofentse Motshudi – a competition law expert at Fullard Mayer Morrison Attorneys who previously worked for the commission – said while it is difficult to surmise what might transpire without seeing the filed legal papers, the tribunal may opt to fine FirstRand up to 10% of its revenue if it finds the company was the ultimate architect of the alleged collusive behaviour in which WesBank participated at its behest.

However, he said FirstRand may invoke the concept of ‘affected turnover’ to argue that the parent company’s revenue should not be used as the basis for calculating a potential fine.

That implies that even if FirstRand is found to be the chief architect of the alleged collusion, a fine levied on affected turnover would likely only apply to the entities whose revenue would have benefited from the alleged infraction i.e. WesBank and TFS-SA.

Full Business Day report