The Tribunal has granted interim relief to the Sekunjalo Group, preventing three banks from closing their bank accounts and ordering five others to reopen bank accounts that have already been closed.
 
The interim relief will subsist for a period of six months from the date of the Tribunal’s order or pending the conclusion of an investigation by the Competition Commission (“the Commission”) into a complaint regarding restrictive practices filed by the Sekunjalo Group against the banks (whichever occurs first).
 
A total of 36 applicants (including Dr Iqbal Survé, the Sekunjalo Group’s chairperson) (collectively “the applicants” or “the Sekunjalo Group”) brought the interim relief application against nine banks, claiming that the banks’ conduct, in terminating the banking relationship with them and/or refusing to provide banking and payment services to them, constituted an abuse of dominance and/or collusive conduct in contravention of the Competition Act (“the Act”).
 
The nine banks are Nedbank Ltd (“Nedbank”); ABSA Bank Ltd (“ABSA”); First Rand Bank Ltd (“First Rand”); SASFIN Bank Ltd (“SASFIN”); Access Bank Ltd (“Access Bank”); Standard Bank of South Africa Ltd (“Standard Bank”); Mercantile Bank Ltd, a division of Capitec Bank Ltd (“Mercantile”); Bidvest Bank Ltd (“Bidvest”); and Investec Bank Ltd (“Investec”).
 
In summary, the applicants asked the Tribunal for an interim order prohibiting the closure of their existing banks accounts (where the accounts had not been terminated) and directing the banks to restore accounts that had already been closed.
 
THE TRIBUNAL’S ORDER
 
The banks are ordered to reopen certain bank accounts (on the same terms and conditions as existed before they had been closed) include Nedbank Ltd; ABSA; First Rand; SASFIN; and Access Bank.
 
The banks interdicted from closing the applicants’ bank accounts include Standard Bank; Mercantile; and Bidvest.
 
The Tribunal’s order reads as follows:
 

 
1.2 Standard Bank is interdicted from closing the bank accounts of the Applicants that hold accounts with it, and in any way unilaterally changing the terms and conditions that attach to the accounts and/or services provided.
 
1.3 ABSA is to reinstate/restore the bank accounts including all services that it provided to the Applicants that held accounts with it, save for the exclusions detailed in paragraph 360.3 on the same terms and conditions as existed prior to the closure/termination of the accounts.
 
1.4 First Rand is to reinstate/restore the bank accounts including all services that it provided to the Applicants that held accounts with it, on the same terms and conditions as existed prior to the closure/termination of the accounts.
 
1.5 Mercantile Bank, a division of Capitec Bank Ltd is interdicted from closing the bank account of Health System Technologies (Pty) Ltd, the Fourteenth Applicant, and in any way unilaterally changing the terms and conditions that attach to the account and/or services provided.
 
1.6 Sasfin is to reinstate/restore the bank accounts including all services that it provided to the Applicants that held accounts with it, save for the exclusions detailed in paragraph 360.4, on the same terms and conditions as existed prior to the closure/termination of the accounts.
 
1.7 There is no order pertaining to Investec.
 
1.8 Access Bank is to reinstate/restore the bank account including all services that it provided to Afrinat (Pty) Ltd, the Fourth Applicant, on the same terms and conditions as existed prior to the closure/termination of the account.
 
1.9 Bidvest is interdicted from closing the bank account of Orleans Cosmetics (Pty) Ltd, the Seventh Applicant, and in any way unilaterally changing the terms and conditions that attach to the account and/or services provided.

 
INTERIM RELIEF
 
Interim relief is a procedure to temporarily protect, maintain and restore competition in affected markets while the Commission is investigating a complaint brought to it regarding possible anti-competitive conduct. It applies for a period of six months or until the hearing into the complaint is concluded (whichever occurs first). Interim relief is decided on the basis of evidence before the Tribunal without the benefit of a full investigation and oral evidence.
 
It is not the Tribunal’s function, in interim relief proceedings, to arrive at a definitive finding of a contravention of the Competition Act. A successful applicant is only required to make out a prima facie case, not to establish its case on a balance of probabilities. The applicant is also entitled to show that the conduct it is seeking to interdict is causing them serious/irreparable harm.
 
THE INTERIM RELIEF APPLICATION
 
The Sekunjalo Group argued that the banks’ conduct of closing accounts or refusing to provide banking and payment services constituted an abuse of dominance, or collusion, or coordinated conduct which lessened competition in contravention of the Act. On harm to competition, they argued that without access to banking and payment services, they would cease to trade and effective competition within the various markets in which they operate will be eliminated.
 
In response, the banks argued that this case concerns the right and ability of the banks to enforce the contractual terms that govern the subsistence and management of accounts lodged with them, where the accounts in question may cause the bank significant reputational risk. The banks argued that the enforcement of these contractual terms does not constitute a contravention of the Act. Furthermore, the banks argued that dealing with the applicants, allegedly implicated in wrongdoing, is a reputational risk.
 
REASONS
 
A public version of the Tribunal’s reasons for its decision will be available in due course once any claimed confidential information contained in the reasons has been finalised.
 
In summary, in determining whether it is reasonable and just to grant interim relief to the Sekunjalo Group, the Tribunal considered (i) whether there was prima facie evidence of a prohibited practice; (ii) the need to prevent serious or irreparable harm; and (iii) the balance of convenience.
 
In doing so, the Tribunal applied a transformative, constitutional and context-sensitive approach consistent with the scheme of the Act which seeks to ensure, inter alia, equitable participation in the economy, particularly by small and medium sized businesses and black owned businesses, as heeded by the Competition Appeal Court (“CAC”) in eMedia Investments (Pty) Ltd SA V MultiChoice (Pty) Ltd And Another (“eMedia”).
 
Evidence of an alleged prohibited practice
 
Section 4 of the Act
 
The Tribunal has found that the Sekunjalo Group established prima facie that the banks have engaged in a concerted practice involving a concerted refusal to supply banking services to the Sekunjalo Group amounting to a restricted horizontal practice in terms of section 4(1)(a) of the Act.

The banks justified their conduct on the basis of the reputational risk of dealing with the Sekunjalo group due to findings of malfeasance and impropriety made by the Honourable Justice Mpati, following a Commission of Inquiry into Ayo’s (a company affiliated with Sekunjalo) dealings with the Public Investment Corporation (“PIC”), which he chaired.
 
The Tribunal underlined the significance of the banks managing risk. It said “The banking system is the bedrock of any modern economy as it enables trading within and across borders. Reputation is therefore critical for all the various stakeholders of the banks in order for them to have confidence in the system and in the fact that their money is safe. Reputation also takes time to build, and it provides a commercial advantage for firms in the market. Because of reputation risk, it is not surprising that firms would want to put in place (either for themselves or as regulatory requirement) reasonable risk mitigation strategies which are proportionate to the risks identified.”
 
However, the Tribunal found that the banks’ justification is undermined by them not having shown consistency in its application: “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 Banks themselves indicated that they make no claim regarding the veracity or otherwise of the findings contained in the Mpati report.
 
Section 8 of the Act
 
The Tribunal has found that the Sekunjalo Group established a prima facie case of a prohibited practice on the part of the individual banks relating to an abuse of dominance in terms of section 8(c) (exclusionary conduct on the part of the banks) or section 8(d)(ii) (refusal to supply scarce services) of the Act.
 
The Tribunal found that the Sekunjalo Group established a prima facie case that the individual banks have a substantial degree of market power and are, therefore, dominant in the provision of banking and payment services based on, among others:

The Tribunal found that the Sekunjalo Group established a prima facie case that the individual banks have engaged in the exclusionary act of refusing to supply scarce services when supplying the services is economically feasible and/or a general exclusionary conduct based on, among others:

The Tribunal found that the Sekunjalo Group established a prima facie case that the conduct of individual banks has anti-competitive effects which outweigh the pro-competitive justifications, based on, among others:

 
Irreparable harm
 
The Sekunjalo Group argued that without interim relief they are likely to be left unbanked, would not be able to compete effectively in the markets in which they operate and deleterious consequences would include 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. The banks argued that the Sekunjalo Group could approach alternative banks or make use of third-party service providers. The Tribunal found that third-party payment providers are not economic substitutes for the services provided by the banks and found that this suffices for interim relief purposes.
 
In assessing whether the alleged harm would occur, the Tribunal considered the economic context and importance of having access to banking services: “Firms operating in markets need access to banking facilities to pay salaries and wages to employees, purchase goods and services from suppliers and service providers, receive payments from their customers, apply for credit and loan facilities, finance acquisitions of assets / businesses, to name but a few examples of the banking services required in a modern economy to participate and expand in any market…” The Tribunal concluded that access by firms to banking and payment facilities offered by banks are indispensable for any firm operating in a modern economy.
 
The Tribunal also considered the potential competition and public interest consequences of not having access to banking and payment facilities: “The adverse consequences of not having access to banking and payment services would include the inability of a firm to attract investment and expand in the market(s) that it operates in and apply for credit/loans, as well as the adverse reactions of customers and suppliers when confronted with transacting with a firm without banking and payment facilities. Clearly such a situation would be untenable in a fast-paced modern economic environment.”
 
The Tribunal is satisfied that one can infer that if the Sekunjalo Group do not have access to banking and payment services, “they will be significantly hampered in operating effectively… This will prima facie affect competition in the markets that they operate in, and from a consumer perspective affect the choices of customers in the affected markets, which the Act seeks to promote… if the Applicant firms are hampered in their ability to compete in the markets that they operate in, the public interest such as the promotion of employment and retention of jobs as well as empowerment could be severely affected.”
 
Furthermore, the Tribunal notes: “It is not disputed that the Sekunjalo Group is an empowerment Group… a black economic empowerment entity... Sekunjalo Group provides employment to over 8,500 people with tens of thousands of dependents, mostly from poor black communities. Should Sekunjalo not have access to banking and payment services, many if not all of those jobs could be in danger of being lost, and the participation of tens of thousands of people from black communities in the economy could be in danger of being lost.”
 
Parties’ contractual rights in the context of competition law matters
 
The Tribunal is of the view that competition authorities are duty bound to intervene where any conduct contravenes the provisions of the Act, and the commercial agreements between parties do not override that: “Where the exercise of a private commercial right does not cause competition harm then Bredenkamp and the Act may well be aligned, and the banks’ closure of the bank accounts would be of no consequence competition-wise. However, where there is harm to competition then competition authorities are obligated to intervene.”
 
Balance of convenience
 
The CAC, in eMedia, held that in considering the balance of convenience at the interim stage, the Tribunal has to consider “which of the two parties will suffer the greater harm from the granting or refusal of interim relief, pending a decision on the merits.” 
 
The Tribunal weighed the prejudice that the Sekunjalo Group would suffer if the interim interdict were not granted, against the prejudice to the banks if it were granted. Having considered the transformative imperatives of the Act, and the specifics of this case, the Tribunal has found that the harm or prejudice that the Sekunjalo Group will suffer if interim relief is not granted, is greater than the prejudice which the banks will suffer if the interim relief is granted. Therefore, the balance of convenience favours the Sekunjalo Group and it is reasonable and just to grant them interim relief.