Competition Tribunal confirms Standard Chartered Bank settlement agreement in the so-called Forex cartel case – bank agrees to pay R42.7m penalty and to cooperate in the prosecution of the case
The Competition Tribunal (“Tribunal”) has confirmed, as an order, a settlement agreement wherein the British multinational bank, Standard Chartered Bank (“SCB”), admits liability in regard to the manipulation of the USD/ZAR currency pair between 2007 and 2013 and agrees to pay an administrative penalty of R42 715 880. In addition, SCB agrees to cooperate in the prosecution of the matter.
The settlement agreement, concluded between the Competition Commission (“Commission”) and SCB, has been confirmed as an order of the Tribunal following a hearing this afternoon during which the Tribunal heard and considered submissions from both parties and sought clarity on various clauses contained in the settlement agreement.
Admission of liability
In terms of the settlement agreement, SCB admits that it engaged in the prohibited practices described below (see background), which contravene section 4(1)(b)(i) and (ii) of the Competition Act (“the Act”) i.e. price fixing and dividing markets.
Cooperation
SCB confirms that it is no longer involved in the currency manipulation and agrees to fully cooperate in relation to the prosecution of this matter. In addition, SCB agrees to provide evidence, written or otherwise, which is in its possession or under its control (and which is not subject to legal privilege).
Agreement regarding future conduct
In addition to the above, SCB agrees to:
- refrain from engaging in any conduct that may be in contravention of section 4(1)(b) of the Act, and from engaging in any prohibited practice in future;
- prepare and circulate a statement summarizing the contents of the settlement agreement to its employees, managers and directors who have market-making responsibilities at SCB, within 30 days of the settlement agreement being confirmed as an order of the Tribunal; and
- continue to implement its existing competition law compliance programme as part of its corporate governance policy.
Background
The Commission alleges that between 2007 and 2013, various banks fixed prices of bids, offers and bid-offer spreads in relation to spot trades of ZAR currency pairs through bilateral and multilateral communications using instant messaging platforms and other means of communication. In addition, that the banks assisted each other through allowing a trader with a large open risk position to complete their trades first before trading and through holding and/or pulling their trades to reverse liquidity for each other instead of trading normally in the market. This conduct amounts to price fixing and market allocation in contravention of Section 4(1)(b)(i) and (ii) of the Act.
SCB is one of 28 banks accused by the Commission of manipulating the USD/ZAR currency pair. The Tribunal’s confirmation of the settlement agreement as an order ends the litigation between the Commission and SCB over the currency manipulation allegations.
Citibank N.A also settled in this matter and its settlement agreement was confirmed as an order of the Tribunal in April 2017. Citibank admitted to its involvement in spot trading of ZAR currency pairs between September 2007 and October 2013. It agreed to pay an administrative penalty totalling R69 500 860. It also agreed to fully cooperate in the prosecution of the matter.
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