Media firm pays R1.3m for price fixing in advertising -
Tribunal confirms settlement
The Tribunal has confirmed, as an order, a settlement agreement wherein a Johannesburg based media firm, Corpcom Outdoor (Pty) Ltd (“Corpcom”), admits to price fixing and agrees to pay an administrative penalty of R1 389 438 and contribute R500 198 to the Economic Development Fund.
The Tribunal previously confirmed other settlements in the same case. Firms that settled with the Competition Commission (“the Commission”) include Media Credit Coordinators; Mail and Guardian Media; Carpe Diem Media; SABC; Primedia; Ster Kinekor Theatres; Trudon; United Stations; Media 24; Mediamark; MTV Networks Africa; DStv Media Sales; Provantage; Independent Media; and Caxton & CTP Publishers and Printers.
The price fixing allegations
The settlements follow a Commission investigation launched in 2011. It had been alleged that media firms, through Media Credit Co-Ordinators (MCC), agreed to offer similar discounts and payment terms to advertising agencies that place advertisements with MCC members. Accredited advertising agencies were offered a 16.5% discount for all payments within a 45-day period from the date of the statement whereas non-accredited advertising agencies were only offered a 15% discount. The firms, as MCC members, also agreed to employ an intermediary firm, Corexalance (Pty) Ltd, to perform risk assessments on advertising agencies for purposes of imposing the settlement discount structure and terms on advertising agencies.
The Commission found that the above-mentioned practices restricted competition among competing companies as they did not independently determine an element of price in the form of discount or trading terms. The Commission concluded that this amounted to price fixing and the fixing of trading conditions in contravention of section 4(1)(b)(i) of the Competition Act.
Package of remedies for price fixing
Corpcom agrees to co-operate fully with the Commission until all subsequent proceedings in the Tribunal or Competition Appeal Court are completed. This includes but is not limited to:
- providing evidence and witnesses regarding this matter;
- refraining from engaging in any prohibited practice in the future;
- developing, implementing and monitoring a competition law compliance programme; and
- circulating the contents of the settlement to employees, managers and directors.
Economic Development Fund
In addition to paying the administrative penalty, Corpcom will contribute R500 198 to the Economic Development Fund to allow for the development of Black-owned small media or advertising agencies. The Fund will be managed by the Media Development and Diversity Agency (“MDDA”) and will be subject to annual audits.
Small agency participation
Corpcom engaged in the above-mentioned practices before it became a member of the JCDecaux group. Although JCDecaux was not involved in the above-mentioned practices, solely in the spirit of co-operation with the Commission and recognising that Corpcom remains an entity within the same group as JCDecaux with limited business activity, JCDecaux agrees on behalf of Corpcom to:
- provide 25% in bonus advertising space on roadside digital or static advertising inventory to Qualifying Small Agencies for three years. Qualifying Small Agencies are media, media related agencies or organisations with a turnover not exceeding R50 000 000 and which are majority Black owned. The bonus advertising space will be subject to a total annual advertising space cap of R1 000 000 with a cumulative cap over three years of R3 000 000;
- publish these details in national media, which has a reach to Qualifying Small Agencies, within ten business days of the Tribunal order; and
- provide the Commission with regular written reports in respect of this commitment.
The full settlement agreement will be available on the Tribunal website at www.comptrib.co.za in due course.
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