South Africa&#8217;s competition watchdog has launched an investigation into three pharmaceutical companies suspected of over-charging for cancer medicines, the agency&#8217;s chief said on Tuesday.
Tembinkosi Bonakele, head of the Competition Commission, said the agency would investigate Aspen Pharmacare, Africa&#8217;s biggest generic drug maker, U.S. company Pfizer and Swiss-based Roche Holding.
&#8220;Here we have suspicion, we think that the reason is excessive pricing by the participants in the market. We have to investigate and bring people to book,&#8221; Bonakele told a news conference.
The Commission, which investigates cases before bringing them to the Competition Tribunal for adjudication, said it suspected lung cancer medicines sold by Pfizer had been excessively priced. It also suspects a similar anticompetitive conduct for breast cancer drugs sold by Roche.
The Commission also said it would look into whether Aspen, a local company based in Durban, might have charged excessively for life-saving cancer medicines in South Africa.
Aspen said it would issue a statement shortly. Roche and Pfizer did not immediately respond to telephone requests for comment.
(Reporting by Nqobile Dludla. Editing by Jane Merriman and Mark Potter)

Pfizer, Roche and Aspen face South Africa probe over cancer drug prices

South Africa&#8217;s competition regulator has decided against pursuing a complaint of unfair pricing lodged against mobile phone giants MTN Group and Vodacom by smaller unlisted rival Cell C.
Cell C made the complaint with the Competition Commission in 2013, accusing MTN and Vodacom of discriminatory pricing because its larger rivals made it cheaper for users to call customers on the same network but charged a premium for calls to other networks.
&#8220;The Commission found that it would be unlikely to succeed in a prosecution of the specific conduct subject to Cell C&#8217;s complaint,&#8221; it said in a statement.
However, the Commission, which investigates cases and makes remedial recommendations to the Competition Tribunal, said Vodacom and MTN&#8217;s pricing strategies made it difficult for late entrants like Cell C to compete effectively.
It said there was a need to look more broadly into the state of competition in the South African telecoms market and would discuss possible regulatory interventions with the Independent Communications Authority of South Africa, the industry watchdog, to make the market competitive.
(Reporting by Tiisetso Motsoeneng; Editing by Greg Mahlich)

S.Africa’s competition watch says not pursuing pricing complaint against MTN, Vodacom

By Tiisetso Motsoeneng
JOHANNESBURG (Reuters) &#8211; Some of the banks South African regulators have alleged rigged the rand currency say the case against them lacks specific detail about anti-competitive conduct and its impact, three sources with direct knowledge of the matter said.
The banks have also questioned whether the country&#8217;s Competition Commission can penalise banks which do not have subsidiaries or branches in South Africa, the sources said.
The Competition Commission is seeking to impose fines on more than a dozen local and foreign banks that it alleges colluded to coordinate trading in the rand and the U.S. dollar.
The Commission launched the investigation in April 2015, joining a global clampdown that has led to big banks being fined around $10 billion in total for rigging interest rate and forex benchmarks.
It referred the case to the Competition Tribunal, which holds hearings on anti-trust matters before making a ruling. The Commission has recommended that the Tribunal impose fines amounting to 10 percent of the banks&#8217; South African revenues, the maximum allowed.
At a closed preliminary Tribunal hearing in March, some of the banks raised objections about the lack of specific detail in the case to allow their lawyers to present a defence, one of the sources said.
The Tribunal will meet again in July to consider the banks&#8217; objections if the Commission has done enough to fine-tune its case, the sources said.
The Competition Commission did not immediately respond to a Reuters&#8217; request to comment.
Under South African regulations, the Commission is required to investigate anti-competitive cases within South Africa, or those that have an impact in the country.
&#8220;If there was an anti-competitive conduct, as the Commission alleges, the question then is: did it have an effect in South Africa? That&#8217;s one jurisdictional issue the banks have raised,&#8221; another source said.
Another issue raised was how banks with no subsidiaries or branches in South Africa would be affected.
&#8220;Some of the banks want jurisdictional issues to be cleared up because some of the them named have no branches in South Africa,&#8221; one source said. &#8220;How do you calculate a fine for banks with no branches in South Africa?&#8221;
Australia&#8217;s ANZ Banking Group has no branches in South Africa. Nomura only launched a branch in South Africa in April last year, almost a year into the Commission&#8217;s investigation.
Among the banks, Barclays Africa Group, a regional unit of Barclays Plc, has been granted conditional immunity from prosecution in return for its cooperation in the investigation.
In February, the local arm of Citigroup was fined $5 million for its role in the affair. The Commission said it had set the fine for Citi Bank NA South Africa at less than 10 percent of its annual turnover after the bank &#8220;undertook to cooperate with the Commission.&#8221;
Other banks named in the investigation were Standard Bank, Investec, JP Morgan, BNP Paribas, Credit Suisse Group, Commerzbank AG, Macquarie Bank, Bank of America Merrill Lynch (BAML), HSBC Plc and Standard Chartered Plc.
Standard Bank, South Africa&#8217;s second biggest bank by market value, said its own internal investigation had found no evidence of any wrongdoing.
&#8220;Nonetheless, Standard Bank is treating these allegations very seriously and will engage fully with the Competition Commission and the Competition Tribunal to better understand the basis for the complaints,&#8221; spokesman Erik Larsen said.
StanChart would continue to co-operate with the Tribunal process, spokeswoman Geraldine Matchaba said. JP Morgan, Commerzbank, Bank of America and Nomura declined to comment. Credit Suisse, BNP Paribas, HSBC, ANZ and Macquarie did not respond to email requests for comment.
http://cnbc.africa/news/2017/02/20/south-africa-watchdog-settles-with-citi-over-currency-rigging/
(Editing by Jane Merriman)

Banks raise objections in South Africa’s FX rigging case- sources

South Africa&#8217;s Competition Commission said on Sunday that it had asked the Competition Tribunal to fine construction materials group Afrimat for allegedly &#8220;abusing its dominance by charging excessive prices.&#8221;
&#8220;The Commission is seeking an order from the Tribunal declaring that Afrimat &#8230; must pay the maximum fine allowable by law which amounts to 10 percent of its annual turnover in South Africa as well as its exports from the country,&#8221; the Commission said in a statement.
A unit of Afrimat supplies the main ingredient in clinker bricks, which are mostly used in the construction of low-cost housing units, known as RDP houses in South Africa.
<blockquote>&#8220;The Commission has found that Afrimat abused its dominant position from 2012 until at least 2016 (the conduct may be ongoing) by charging clinker bricks&#8217; manufacturers excessive prices to the detriment of consumers,&#8221; the Commission said.</blockquote>
Afrimat could not immediately be reached for comment.
(Reporting by Ed Stoddard; Editing by Susan Fenton)

South Africa watchdog seeks fine against Afrimat for excessive prices

The Competition Commission of South Africa has referred car carrier company Kawasaki Kisen Kaisha Ltd for a prosecution to the Tribunal for colluding on a tender for transportation of Toyota vehicles.
The Commission referred Kawasaki Kisen Kaisha Ltd (“K-Line”), a Japanese company operating in South Africa, to the Competition Tribunal for price fixing, market division and collusive tendering involving the transportation of Toyota vehicles from South Africa to Europe, the Mediterranean Coast of North Africa and the Caribbean Islands.
This follows the investigation by the Commission which found that K-Line, Mitsui O.S.K Lines Ltd (MOL), Nippon Yusen Kabushiki Kaisha Ltd (NYK), and Wallenius Wilhelmsen Logistics AS (WWL) fixed prices, divided markets and tendered collusively in respect of the shipment of Toyota vehicles from South Africa to Europe, North Africa, and the Caribbean Islands.
This conduct contravenes section 4(1)(b)(i),(ii) &amp; (iii) of the Competition Act 89 of 1998, as amended. The Commission’s investigation found that from at least 2002 to 2013 K-Line, MOL, NYK and WWL colluded on a tender issued by Toyota South Africa Motors (TSAM) to transport Toyota vehicles abroad from South Africa by sea.
The Commission found that K-Line, MOL, NYK and WWL agreed on the number of vessels that they were to operate on the South Africa to Europe routes at agreed intervals or frequencies. It also found that K-Line, MOL, NYK and WWL agreed on the freight rates that they were to charge TSAM for the shipment of Toyota vehicles.
In 2015, NYK and WWL admitted to colluding on this tender and settled with the Commission. NYK, also a Japanese company, paid an administrative penalty of R103 977 927.00. WWL, a Norwegian company, paid an administrative penalty of R95 695 529.00. MOL, another Japanese company, was not fined as it was first to approach the Commission and cooperated. MOL, NYK and WWL will cooperate with the Commission in prosecuting K-Line.
The Commission is seeking an order from the Tribunal declaring that K-Line, MOL, NYK and WWL contravened section 4(1)(b)(i),(ii) &amp; (iii) of the Act as well as an order declaring K-Line to be liable for payment of an administrative penalty equal to 10% of its annual turnover.
“South Africa is a strategic hub for the trade of goods in and out of the Southern African region. Any cartel by shipping lines in this region results in inflated prices for cargo transportation. Cartels of this nature increase the costs of trading in the region and render the region uncompetitive in the world markets. Such cartels have the effect of significantly derailing the economic growth of the region”, said the Commissioner of the Competition Commission Tembinkosi Bonakele.

S.A’s Competition Commission accuses Toyota carrier of collusion

Finance Minister Pravin Gordhan asks that reckless culture that led to the financial crisis must be prevented﻿.
South Africa’s National Treasury has proposed a dedicated market conduct regulator to deal with the abuses of banks.
In a press conference hosted by Treasury on Wednesday, South Africa’s Finance Minister said the 17 banks which have been referred to the Competition Tribunal for colluding in forex price fixing must be dealt with. Financial institutions must act responsibly to prevent the reckless culture that led to the financial crisis, he urged.
In his Budget speech he said the Competition Commission investigation into the banks, which led it to refer them to the Tribunal, is evidence “of a collusive culture at trading desks in banks. It is precisely to deal with such abuses that we have proposed a dedicated market conduct regulator, and we hope Parliament will pass this Bill as soon as possible”.
His speech also revealed that the Reserve Bank and National Treasury have initiated work on a more comprehensive Financial Markets Review under the leadership of former Deputy Governor James Cross.﻿

Market conduct regulator being considered for S.A’s banks

On 17 February 2016, the Organisation Undoing Tax Abuse (OUTA) lodged a formal complaint, evidence and detailed submission to the Competition Commission, alleging anti-competitive behaviour and abuse of dominant market position by Eskom, the national electricity utility of South Africa.
 OUTA is a civil action organisation in South Africa that investigates, exposes, litigates and mobilises public opposition against what it sees as tax abuse, maladministration and corruption in the public and private sectors. 
OUTA started out mobilising civil opposition to electronic tolling (e-tolls) on provincial highways in Gauteng by the South African National Roads Agency (SANRAL), and this has since extended to e-tolling nationally.
In 2016, OUTA further expanded its activities to include civil actions against South African Airways (SAA), the South African Broadcasting Corporation (SABC), Eskom, electricity price increases, the proposed carbon tax, and the proposed nuclear new-build in South Africa.
 This latest submission and complaint to the Competition Commission comes after recent media exposés of Eskom malfeasance including:
<ul>
<li>Massive time and cost overruns in the construction of Eskom&#8217;s 4800 MW Medupi and Kusile coal-fired power stations and 1333 MW Ingula pumped water storage scheme;</li>
<li>An allegedly irregular R587-million payment by Eskom to Tegeta enabling the Gupta controlled company to buy Optimum Coal;</li>
<li>The Dentons investigation and report into financial, operational and procurement irregularities at Eskom in the lead up to and aftermath of load shedding in 2014/15;</li>
<li>The Deloitte report and subsequent investigation by the Special Investigating Unit (SIU) into coal procurement irregularities before, during and after the load shedding of 2007/8; and</li>
<li>The Public Protector&#8217;s report on State Capture in South Africa, which had a heavy emphasis on the allegedly irregular relationship between Eskom and the Gupta family, and led to the resignation of the former Eskom CEO.</li>
</ul>
A summary of OUTA&#8217;s case against Eskom has been extracted from its full submission to the Competition Commission, and is provided below for readers&#8230;
 <a href="http://r20.rs6.net/tn.jsp?f=001GqIK-YcZhm58MYQec-EzxQ6h5_zJdAnY4oEUYjIaUhPVZlA2fmNVLXFbzsM1E9XI8cETCSu3ebskZjADyRfIzDk3aTwA03x5Gwcs0Iw-ziqNt0whGahlugBcr7T413tb3vEKsJmXBvHH-5PZrGd2Khzty5QzWkMmi4akp_RiCePltXWG5XqusoTa3fgYYhz_RY7koAF91v6ZDkjxdz27h45sVD5WG7KPduKyoPIrKz8QuIxuMoMAQ8Vu-edacflzHm-WMHdLy_g=&amp;c=lXNJdLSuxZQxCLrFPt5HE8kaovDHEvAyVxHX-VBcoWY4e__LYfSfew==&amp;ch=JQdBM7nGoQhYBohEWfp0IB3fcBjSggFK940VHE_KsGHLuOvee7n2Dg==" target="_blank">Click here for a summary of OUTA&#8217;s case against Eskom</a>  <a href="http://r20.rs6.net/tn.jsp?f=001GqIK-YcZhm58MYQec-EzxQ6h5_zJdAnY4oEUYjIaUhPVZlA2fmNVLXFbzsM1E9XIjg_LBdpNN53VHB40_d5bJhHfzVujAPcX2Y2P1SGKvFztYLtG9_GSef4Iuy0f-Fw69TVBkZY4jsDRo7Cb6KyhMf3KNBwLl4p_y3uNpKLwIfGV-9nDJPt-w3HVrX_pq73FLf_S3nOZqWx2avUPQuL4XrEf_5OZ8lR5Gsm4FaGuNlStXbIZRHNJ9V8xv596vOpO&amp;c=lXNJdLSuxZQxCLrFPt5HE8kaovDHEvAyVxHX-VBcoWY4e__LYfSfew==&amp;ch=JQdBM7nGoQhYBohEWfp0IB3fcBjSggFK940VHE_KsGHLuOvee7n2Dg==" target="_blank">Click here for OUTA&#8217;s full submission to Competition Commission﻿</a>

OUTA files complaint against Eskom with Competition Commission

The Competition Commission on Wednesday referred a collusion case to the tribunal for prosecution against 17 banks, including three of South Africa&#8217;s big banks.
Anthony Crane, Competition Law Partner at law firm Dentons SA is concerned.
“This investigation could have serious ramifications for the banks involved as the Competition Tribunal is able to hand out administrative fines of up to 10% of turnover for collusive conduct such as price fixing. Last year 6 banks in the United Kingdom were ordered to pay USD 6 billion for manipulating foreign exchange markets in 2013. Coupled with the fact that our courts are now getting to grips with private damages claims as indicated in the recent SAA Comair matter, this could end up being an extremely expensive exercise.”
In the State of the Nation address the banking sector was criticised for its highly-concentrated nature and so the timing of the referral is unfortunate for the banks. However, they now have an opportunity to formally respond to the allegations before the Tribunal.
“In a world of substantial and ever-increasing fines, as well as the potential for private damages actions, it would be critical for the banks to show that they have stringent compliance policies in place. This would assist in providing accurate data and reports to the authorities to show that the conduct complained of was that of a deviant employee/s, and not common practice.”
<img loading="lazy" decoding="async" src="/media/19334362/4027_anthony_crane.jpg" width="299" height="448" alt="4027_Anthony Crane"/>﻿
Photo caption: Anthony Crane, Partner, Dentons law firm South Africa﻿

Banks must prove stringent compliance policies

The Competition Commission has today referred a collusion case to the Tribunal for prosecution against Bank of America Merrill Lynch International Limited,  BNP Paribas, JP Morgan Chase &amp; Co, JP Morgan Chase Bank N.A, Investec Ltd, Standard New York Securities Inc., HSBC Bank Plc, Standard Chartered Bank, Credit Suisse Group; Standard Bank of South Africa Ltd, Commerzbank AG; Australia and New Zealand Banking Group Limited, Nomura International Plc., Macquarie Bank Limited, ABSA Bank Limited (ABSA), Barclays Capital Inc, Barclays Bank plc (Respondents).
The Commission has been investigating a case of price fixing and market allocation in the trading of foreign currency pairs involving the Rand since April 2015. It has now referred the case to the Tribunal for prosecution.
The Commission found that from at least 2007, the respondents had a general agreement to collude on prices for bids, offers and bid-offer spreads for the spot trades in relation to currency trading involving US Dollar / Rand currency pair. Further, the Commission found that the respondents manipulated the price of bids and offers through agreements to refrain from trading and creating fictitious bids and offers at particular times.
Traders of the respondents primarily used trading platforms such as the Reuters currency trading platform to carry out their collusive activities. They also used Bloomberg instant messaging system (chatroom), telephone conversation and had meetings to coordinate their bilateral and multilateral collusive trading activities. They assisted each other to reach the desired prices by coordinating trading times. They reached agreements to refrain from trading, taking turns in transacting and by either pulling or holding trading activities on the Reuters currency trading platform.  They also created fictitious bids and offers, distorting demand and supply in order to achieve their profit motives.
The Commission is seeking an order from the Tribunal declaring that the respondents have contravene the Competition Act. Further, the Commission is seeking an order declaring that the Bank of America Merrill Lynch International Limited,  BNP Paribas, JP Morgan Chase &amp; Co, JP Morgan Chase Bank N.A, Investec Ltd, Standard New York Securities Inc., HSBC Bank Plc, Standard Chartered Bank, Credit Suisse Group; Standard Bank of South Africa Ltd, Commerzbank AG; Australia and New Zealand Banking Group Limited, Nomura International Plc., Macquarie Bank Limited are liable for the payment of an administrative penalty equal to 10% of their annual turnover.
“The referral of this matter to the Tribunal marks a key milestone in this case as it now affords the banks an opportunity to answer for themselves,” said the Commissioner, Tembinkosi Bonakele. ﻿
BACKROUND TO CURRENCY TRADING
Currency trading is by definition an act of buying and selling one country’s currency for another country’s currency. The participants in currency trading are dealers, customers and brokers.
Dealers are large financial institutions or banks that accept orders from customers to buy and sell currencies from customers. They are commonly known as market makers. Customers are entities or individuals that are seeking to exchange currencies by placing orders for trades with dealers.
They include corporations and asset managers such as hedge funds, mutual funds, pension funds, and various government financial institutions such as central banks and some individuals who exchange substantial quantities of currency. Brokers are intermediaries that facilitate trade between the dealers.
There are different ways of trading on currency globally. These are spot, forward and futures transactions with spot being the most and common way of currency trading. Spot transaction is currency trading transaction that takes place on the spot which the actual settlement happens within two days of the transaction. If the settlement period goes beyond two days then it is called forward transaction.
A forward transaction is a transaction which is concluded on the spot and the actual settlement will only takes place later, at least after two days. Futures transaction relates to a transaction that gives rise to an obligation to buy or sell an underlying currency at a fixed exchange rate at a specified date in the future.
Simplified example of how currency trading takes place
Suppose a customer which is an importer wants to sell the ZAR and purchase the United State of American Dollar (USD). That customer will approach a dealer for a quotation for a spot transaction. These quotes are usually requested as a buy and sell price.
The price at which the dealer is prepared to buy is called the bid, and the price at which the dealer is prepared to sell is called the offer. Prices are represented by the following expression: 1 USD = ZAR 13.3402 / 1 USD = ZAR 13.3502. The first price is the dealer’s bid and the latter the dealer’s offer.
As the 1 USD = ZAR 13.3502 represents the price at which the dealer is prepared to sell USD (and where the customer or the importer can chose to buy), if the customer chooses to transact, he will pay ZAR 13.3502 and receive 1 USD. If the dealer is approached by an exporter who wishes to sell the USD and the dealer is willing to buy, the dealer will pay ZAR 13.3402 and receive 1 USD.
The difference between ZAR 13.3402 and ZAR 13.3502 is called the bid offer spread. The bid offer spread in this example is 100 pips.
If the dealer sold its USD (to the customer or the importer) and no longer has USD position, it can decide to keep that position (that is not to go to the market to buy USD) or can go to the market to buy USD. When the dealer goes to the market to buy USD, the dealer (through its trader) will usually skew its price to the right, (that is showing better bids than offers) and attract sellers of USD.
When the dealer goes to the market to show its price, the trader will either log into the dealer owned trading platform or Reuters trading platform. When the dealer shows its bid price in the trading platform, then the interaction with other traders who will be either buying or selling currency in the market commences.
The Reuters currency trading platform is called Reuters Dealing 3000. It is the most commonly used trading platform, especially for ZAR. The other trading platforms include Electronic Broking Services (EBS) and Bloomberg. Reuters Dealing 3000 is an interbank trading platform used by dealers to enter into currency trading with counterparties. Reuters Dealing 3000 typically runs on a standalone Reuters terminal rather than as a computer application. It is displayed on the Reuters screen at each trading station. It also has messaging functionality that allows traders to communicate and transact with one another.
EBS is also electronic trading platform which is largely the same with Reuters Dealing 3000 but it is not typically used for USD/ZAR trading. Customers can request spot prices from certain dealer dealers. Bloomberg is also a currency trading platform. It can also be used for other functions s uch as a source of information and as a tool for communication.
As a source for information, Bloomberg platform provides news headlines to the specific currency markets and movements in exchange rates for particular currency pairs. As a tool for communication, it offers electronic instant messaging platform through which traders may communicate among themselves, with customers, sales personnel, brokers and anyone who has a Bloomberg account. It is this instant messaging system that the respondents’ traders used to communicate and coordinate their trading activities. This instant messaging system is also called Bloomberg chatrooms.﻿

Competition Commission prosecutes banks (currency traders) for collusion

ArcelorMittal&#8217;s South African unit has agreed to pay a 1.5 billion rand ($110 million) fine for colluding to fix steel prices, the competition watchdog said on Monday.
The Competition Commission launched an investigation in 2008 after concerns were raised that steel mills had been charging import parity prices, or prices that consumers would pay if they imported the commodity, since 2002.
The South African steel industry, which includes state-controlled Scaw Metals, produces enough steel to meet local demand.
The settlement, to be paid in five annual installments of no less than 300 million rand, and includes a year-long 10 percent cap in EBIT margin, will pile more pressure on a company facing falling demand, rising cheap imports and higher costs.
Shares in ArcelorMittal South Africa fell more than 80 percent in 2015, underscoring the scale of investor concern and the state of its operating environment.
By 0916 GMT, the stock was down 0.78 percent at 7.72 rand, reversing earlier gains of as much as 2 percent.
ArcelorMittal South Africa, which has not made a profit in half a decade, also agreed to 4.6 billion rand in capital expenditure over five years as part of the settlement, the Commission said.
&#8220;The penalty sends a strong message of deterrence and is an important milestone in the Commission&#8217;s enforcement against cartels,&#8221; Commissioner Tembinkosi Bonakele said.
(Reporting by Tiisetso Motsoeneng; Editing by James Macharia)﻿

Competition Commission

Pfizer, Roche and Aspen face South Africa probe over cancer drug prices

S.Africa’s competition watch says not pursuing pricing complaint against MTN, Vodacom

Banks raise objections in South Africa’s FX rigging case- sources

South Africa watchdog seeks fine against Afrimat for excessive prices

S.A’s Competition Commission accuses Toyota carrier of collusion

Market conduct regulator being considered for S.A’s banks

OUTA files complaint against Eskom with Competition Commission

Banks must prove stringent compliance policies

Competition Commission prosecutes banks (currency traders) for collusion

ArcelorMittal South Africa to pay $110 mln to settle anti-trust charges

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Competition Commission

Pfizer, Roche and Aspen face South Africa probe over cancer drug prices

S.Africa’s competition watch says not pursuing pricing complaint against MTN, Vodacom

Banks raise objections in South Africa’s FX rigging case- sources

South Africa watchdog seeks fine against Afrimat for excessive prices

S.A’s Competition Commission accuses Toyota carrier of collusion

Market conduct regulator being considered for S.A’s banks

OUTA files complaint against Eskom with Competition Commission

Banks must prove stringent compliance policies

Competition Commission prosecutes banks (currency traders) for collusion

ArcelorMittal South Africa to pay $110 mln to settle anti-trust charges

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