Johannesburg - The Competition Tribunal on September 16 granted interim relief to the Sekunjalo Group and related entities in a groundbreaking decision by interdicting and preventing three banks from closing Sekunjalo Group bank accounts and ordering five others to reopen accounts that had been closed – on the same terms and conditions that had existed before they were terminated.
The Black Business Chamber welcomed the tribunal’s ruling. The chamber had written to the Competition Commission in February requesting an investigation in to possible collusion between the country’s major banks closing the Sekunjalo Group’s accounts.
“While the Competition Commission is still deliberating on the conduct of these banks and is yet to make a ruling, (the chamber) is hoping that there is no other logical determination that the commission can reach other than concluding that these banks have colluded against (the Sekunjalo Group) in the closure of (its) accounts,” the chamber’s secretary-general Mntuwekhaya Cishe said.
He said two major developments preceding the ruling had affirmed the chamber’s long-held view: “In March, judge Willem Heath issued a report in which Sekunjalo and its chairman Dr Iqbal Survé were absolved of (the) findings of the Mpati Commission, used by competitors of Independent Media to campaign Sekunjalo and its group of companies. In June, the Equality Court granted Sekunjalo and its group of companies (an) interim interdict to keep (its) Nedbank accounts open.”
The interim relief will subsist for six months from the date of the tribunal’s order, or pending the conclusion of an investigation by the Competition Commission into a complaint regarding restrictive practices filed by the Sekunjalo Group against the banks, whichever occurs first.
The Sekunjalo Group, which comprises 36 applicants including its Dr Iqbal Survé, brought the interim relief application against nine banks, citing their conduct in terminating their banking relationships with the group and/or refusing to provide banking and payment services as an abuse of dominance and/or collusive conduct in contravention of the Competition Act.
The nine banks are Nedbank, Absa, First Rand Bank, Sasfin, Access Bank, Standard Bank, Mercantile Bank (a division of Capitec Bank), Bidvest, and Investec.
Survé said: “This has been a challenging period for all of us, but this outcome is undoubtedly a step in the right direction to restoring our reputation, as well as our ability to trade and deliver on our group mandate. We are most grateful to the tribunal for their fair, just and considered opinion of the facts at hand.
“I would also like to express my sincere gratitude to the leadership and employees of the various companies within the Sekunjalo Group for their belief in our cause, and for the resilience that they have shown throughout this tireless process.”
In its ruling, the tribunal found that the Sekunjalo Group had established prima facie that the banks had engaged in a practice involving a concerted refusal to supply banking services to the Sekunjalo Group amounting to a restrictive horizontal practice in terms of section 4(1)(a) of the Competition Act.
“Banking plays a central role in the economic life of society, and no commercial transaction of substance and scale is possible without banking services,” the tribunal said.
The Sekunjalo Group had established a prima facie case that the conduct of the banks impeded or prevented the Sekunjalo Group from participating in or expanding within the markets in which the group operated, thereby substantially lessening competition.
According to the tribunal, the banks justified their conduct based on the reputational risk in dealing with the Sekunjalo Group, owing to findings made by the Mpati Commission.
However, the tribunal said the banks had undermined their own justification as they had not shown consistency in their conduct.
“The undisputed 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 of corruption. Concrete evidence of consistency in approach by the respondents in relation to reputational risk would have given their stated case more weight.”
The tribunal said the banks had indicated that they made no claim regarding the veracity or otherwise of the findings contained in the Mpati Commission report.
Sekunjalo had argued that without interim relief it was likely to be left unbanked, would not be able to compete effectively in the markets in which it operated, leading to deleterious consequences, including the loss of jobs and livelihoods of tens of thousands of people and the loss of competitive black-owned businesses. If no relief was granted, that would cause serious or irreparable damage.
While the banks argued that the Sekunjalo Group could approach alternative banks or use third-party service providers, the tribunal said it had been established that third-party payment providers were not economic substitutes for the services provided by the banks, and that this sufficed for interim relief purposes.