Cape Town – Twenty eight media companies have been referred to the Competition Tribunal for prosecution on charges of price fixing and the fixing of trading conditions, in contravention of the Competition Act, the Competition Commission said in a statement issued on Tuesday.
In referring the matter to the tribunal for prosecution, the commission says it is seeking an order declaring that the media companies contravened the act and are liable to pay penalties in terms thereof.
According to the commission, the matter relates to an investigation that was initiated in 2011. This investigation found that various media companies agreed to offer similar discounts and payment terms to advertising agencies that placed advertisements with members of Media Credit Co-Ordinators (MCC).
MCC accredited agencies were offered a 16.5% discount, while non-members were offered 15%.
In addition, the commission found that the implicated companies – through MCC – employed the services of an intermediary company called Corexalance (Corex) to perform risk assessments on advertising agencies. The purpose was to impose a settlement discount structure and terms on advertising agencies.
The commission found that the practices restricted competition among the competing companies as they did not independently determine the discounts and thereby fixed the price and trading terms in contravention of the Competition Act.
“This is one of the legacy media practises that survived the introduction of the Competition Act in South Africa. It is a problem because it consolidates operations of a few media houses that gang up against mainly small advertising agencies,” said Competition Commissioner Tembinkosi Bonakele.
“It is encouraging that some media houses have settled the matter and will also be directly contributing towards promoting the entry of small and black advertising agencies.”
The commission said in its statement that Independent Media, Caxton & CTP Publishers and Printers and DStv Media Sales have since admitted to the charges in relation to this matter. Among others, these media companies agreed to pay administrative penalties as part of separate settlement agreements with the commission.
Caxton agreed to pay R5 806 890.14; Independent agreed to pay R2 220 603; and DStv Media Sales agreed to pay R22 262 599.
The companies also agreed to contribute towards the Economic Development Fund over the next three years.
The fund seeks to develop black-owned small media or advertising agencies that require assistance with start-up capital and will assist black students with bursaries to study media or advertising, among others. It will be managed by the Media Development and Diversity Agency.
Caxton will pay R2 090 480.45 to the fund; Independent will pay R799 417; and DStv Media Sales will pay R8m.
The original 28 media companies are:
1. SABC
2. Media 24
3. Primedia
4. Mail & Guardian
5. Avusa Media
6. Mtv Networks Africa
7. Media 24 Magazines
8. Primedia Outdoor
9. Cinemark
10. Comutanet
11. Conde Nast Independent Magazine
12. The Citizens
13. Spark Media
14. Apurimac Media
15. Provantage Media
16. Radmark
17. Carpe Diem Media
18. Rodale And Touchline
19. Mandla-Matla Publishing
20. Ramsay Media
21. Lugan Investments
22. Associated Media
23. Associated Hearst
24. Capro
25. Trudon
26. United Stations
27. Continetal Outdoor
28. Media Credit Coordinators
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