Cape Town - Media24 has agreed to pay an administrative penalty of R13.83m as settlement in a price-fixing case brought against it and 27 other media companies by the Competition Commission.
The settlement follows similar penalty agreements between the commission and Caxton and CTP Publishers and Printers (R5.8m), Independent Media (R2.22m) and DStv Media Sales (R22.26m).
“This is one of the legacy media practices 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," Competition commissioner Tembinkosi Bonakele commented earlier.
As part of the settlement, Media24 has also agreed to contribute R4.98m to the Economic Development Fund over a three-year period and provide 25% bonus advertising space for every rand of advertising space bought by qualifying small agencies over three years (capped at R35 000 000 annually).
Bonakele finds it 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 via the Economic Development Fund.
On February 27 2018 the commission referred more than 20 media companies to the tribunal for prosecution on charges of price-fixing and the fixing of trading conditions in contravention of the Competition Act.
According to the commission, the case relates to an investigation dating from November 2011. It found that, through Media Credit Co-Ordinators (MCC), various media companies agreed to offer similar discounts and payment terms to advertising agencies that place advertisements with MCC members.
MCC accredited agencies were offered a 16.5% discount for payments made within 45 days of the statement date, while non-members were offered 15%. In addition, the commission’s investigation found that the implicated companies, as MCC members, employed the services of an intermediary company called Corex to perform risk assessments on advertising agencies 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.
The commission said in a statement issued on Friday that Out-of-home advertising firm Provantage Media has also admitted to price-fixing and fixing of trading conditions. It agreed to pay R1.09m as part of its settlement agreement.
The commission has referred the Media24 and Provantage Media settlement agreements to the Competition Tribunal for confirmation.
Media24 said in a statement that the terms of its settlement are similar to those of the other parties who have already settled this matter and are, like the previous settlements, subject to the approval of the Competition Tribunal.
Media24 said it will cooperate with the competition authorities’ processes in order to finalise this matter.
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