The Competition Commission of South Africa v Bank of America Merrill Lynch International Designated Activity Company and others

The Competition Commission referred 28 banks (both South African and foreign) to the Competition Tribunal, alleging they colluded to manipulate the USD/ZAR foreign exchange rate from September 2007 to at least September 2013 in contravention of section 4(1)(b)(i) and (ii) of the Competition Act 89 of 1998. The Commission based its case on a single overarching conspiracy (SOC) involving coordination between traders through Bloomberg chatrooms (particularly the 'Old Gits' and 'ZAR' chatrooms) and Reuters trading platforms. The litigation had a long history: the original 2017 referral was found inadequate by the Tribunal in 2019. The Competition Appeal Court in 2020 gave the Commission a 'final opportunity' to file a new referral affidavit addressing jurisdictional defects. The Commission filed a new referral in June 2020. The Tribunal in 2023 dismissed exceptions and applications for dismissal, finding sufficient prima facie evidence of an SOC. The respondent banks appealed, challenging jurisdiction, compliance with the 2020 order, and the adequacy of pleadings.

• Whether the Tribunal's interlocutory decision was appealable under section 37(1) of the Competition Act
• Whether the Commission complied with the Competition Appeal Court's 2020 order when filing the amended referral affidavit
• Whether the Commission could join additional respondents after the matter had been referred to the Tribunal
• Whether holding companies could be joined when they did not trade in foreign currency or employ implicated traders
• Whether personal jurisdiction was established over pure peregrini (foreign banks with no South African presence)
• Whether subject matter jurisdiction was established under section 3(1) of the Competition Act
• Whether the referral affidavit sufficiently pleaded a single overarching conspiracy (SOC) meeting the requirements from European jurisprudence (Team Relocations test)
• Whether the referral affidavit was vague and embarrassing in contravention of Tribunal Rule 15(2)

The appeals by several respondents were upheld, and the Tribunal's order was set aside in respect of: First, Fourth (on jurisdictional grounds), Fifth, Sixth, Ninth, Eleventh, Twelfth, Thirteenth, Nineteenth, Twenty-first, Twenty-fourth, Twenty-fifth, Twenty-sixth, Twenty-seventh, and Twenty-eighth respondents. The appeals by the Second, Third, Fourteenth, and Twenty-third respondents were dismissed, and these respondents were ordered to file answering affidavits within 40 days. No order as to costs was made, following the principle in Pioneer Hi-Bred that the Commission should not be inhibited by costs when bona fide fulfilling its statutory mandate in the public interest.

The binding legal principles established are: (1) Decisions of the Competition Tribunal concerning jurisdiction are appealable as 'final decisions' under section 37(1)(b)(i) of the Competition Act, applying the interests of justice test from Lubashe. (2) To establish a single overarching conspiracy in competition law, the Commission must demonstrate: (a) a common anti-competitive objective (an overall plan pursuing a common economic objective); (b) each firm's intentional contribution by its own conduct to the common objectives; and (c) that each firm was aware of the conduct planned or implemented by other participants, or could reasonably have foreseen it and was prepared to take the risk. (3) Personal jurisdiction over pure peregrini in competition cases requires adequate connecting factors demonstrating participation in a conspiracy with South African entities; occasional participation in chatrooms without clear links to South African banks is insufficient. (4) Personal jurisdiction and subject matter jurisdiction are distinct requirements in competition law. Section 3(1) addresses only subject matter jurisdiction (conduct having a direct, immediate and substantial effect in South Africa). (5) Holding companies cannot be joined to competition proceedings merely because subsidiaries engaged in prohibited conduct; they must themselves have participated in the impugned conduct. (6) The Commission cannot join additional parties after referral to the Tribunal unless tacit initiation can be demonstrated. (7) Referral affidavits must comply with Tribunal Rule 15(2) by setting out material facts with sufficient particularity to enable respondents to know the case they must meet.

The Court made several important observations: (1) It emphasized that cartel conduct is 'the most egregious form of anti-competitive conduct' but courts must balance this against 'potential regulatory overreach.' (2) The Court noted that modern technology has created conditions for a global economy where national borders are transcended, justifying development of personal jurisdiction beyond traditional common law constraints in appropriate cases. (3) The Court observed that the distinction between public domain information (e.g., on Reuters platform) and commercially sensitive information is crucial in forex manipulation cases but was inadequately addressed in the referral affidavit. (4) The Court commented that the Reuters information platform is 'primarily a news outlet akin to Bloomberg' where trades are not executed but indicative rates are posted, and is not a trading platform. (5) The Court noted the 'regrettable' delay by the Tribunal in issuing its decision (from hearing in November-December 2021 to decision in March 2023). (6) The Court criticized the Tribunal for 'almost uncritically' deferring to the Commission on several issues, including improper joinder of holding companies. (7) The Court observed that if the effects of trades were de minimis relative to overall market volumes, this may undermine the case, though this is better addressed at trial. (8) The Court emphasized the 'torturous history' of the litigation and that the 2020 order gave the Commission a 'final opportunity' to remedy defects in its case.

This judgment is significant in South African competition law for several reasons: (1) It clarifies the appealability of Tribunal decisions concerning jurisdiction, applying the Constitutional Court's Lubashe decision on the 'interests of justice' test for appealability, despite the Supreme Court of Appeal's contrary approach in TWK. (2) It establishes strict requirements for pleading a single overarching conspiracy (SOC) in cartel cases, adopting the three-part test from European jurisprudence (Team Relocations): common anti-competitive objective, intentional contribution, and knowledge/foreseeability. (3) It distinguishes between personal jurisdiction and subject matter jurisdiction in competition matters, developing the common law on personal jurisdiction over foreign entities while maintaining strict requirements for establishing adequate connecting factors. (4) It confirms that section 3(1) of the Competition Act addresses subject matter jurisdiction, not personal jurisdiction. (5) It limits the Commission's ability to join parties after referral to the Tribunal, clarifying that tacit initiation requires clear evidence of a decision to initiate against additional parties. (6) It confirms holding companies cannot be joined merely by virtue of share ownership in subsidiaries that engaged in prohibited conduct. (7) It emphasizes the importance of distinguishing between public domain information and evidence of actual collusion in forex manipulation cases.