COVID-19: EXPANSION OF BANKING SECTOR BLOCK EXEMPTION

Wednesday, May 13, 2020
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Following the declaration of COVID-19 as a national disaster, the Minister of Trade, Industry and Competition (Minister) published regulations providing for a block exemption in the banking sector (click here for more).

The exemption allows banks, the Banking Association of South Africa and/ or Payments Association of South Africa, to cooperate by way of agreements or practices which would ordinarily be prohibited in terms of sections 4 and 5 of the Competition Act, No. 89 of 1998, dealing with horizontal restrictive practices and vertical restrictive practices, respectively.

The Minister has now published regulations (Regulations) expanding the scope of the exemption to apply to the Association for Savings and Investment South Africa (ASISA) and financial institutions registered as such in terms of the Financial Sector Regulation Act, No. 9 of 2017.

Insofar as members of ASISA and financial institutions operate as lenders, the Regulations allow these firms to coordinate their activities for the sole purpose of ensuring that debtor management and credit extensions continue during the period of national disaster. 

Any exemption granted would be limited to the development of industry policies and monitoring in respect of (i) payment holidays and debt relief measures for businesses and industry sectors; (ii) limitations placed on asset repossessions; (iii) and the extension of credit lines to individuals and businesses subject to financial stress.

The Regulations state that they apply only to agreements or practices undertaken at the request of, and in coordination with, the Minister or the Minister of Finance, and exclude communication in respect of prices, unless specifically authorised by either the Minister or the Minister of Finance.  

If exempted, documented minutes of meetings and written records of any agreements entered into, must be maintained.