Tribunal imposes Media24 a Credit Guarantee Remedy following a finding it forced out a competitor
5 September 2016
The Competition Tribunal today (5 September 2016) issued a finding on remedies to address the harm done by Media24 through its predatory pricing strategy in the Goldfield’s area which includes giving publications in the area 90 days to pay for printing and distribution, instead of having to pay upfront as was the previous practice.
Media24 was found by the Competition Tribunal, on 8 September 2015, to have contravened section 8(c) of the Competition Act by engaging in a predatory pricing strategy to drive a rival community newspaper publication, called Gold Net news (GNN) out of the market in the Welkom area, for the period 2004 to 2009. It was the first predatory pricing conviction in the Tribunal’s 16 year history.
As this was a first time contravention of section 8(c) by Media24 a fine could not be imposed. The Tribunal decided, however, that remedies were required to address the harm Media 24 has done to competition in the area, robbing both consumers and advertisers of an alternative publication that would ensure diversity and competition.
The Tribunal today imposed a Credit Guarantee Remedy, as a declaration by Media 24 admitting to the contravention. This is important as it means Media24 can be fined should they be found guilty of a second contravention.
The Credit Guarantee Remedy allows current or new publications within the Goldfields area to approach Media24 for specific credit terms with Medi 24 owned printing and distribution companies Paarl Coldsest and OntheDot. The order provides, subject to publishers meeting certain requirements that Paarl Coldset and OntheDot should allow publishers 90 days to pay for their printing and distribution. Any publishers who feel that Media 24 has not obeyed the Tribunal’s order should send complaints to the Competition Commission.
The Tribunal was last year that Media24 had engaged in a multi-pronged strategy which included Media24 using a title Forum, as a “fighting brand” to prevent GNN from expanding in the market. The strategy entailed prices its advertising rates below average total cost and operating Forum even though it was making a losss. GNN finally exited the market in 2009. Ten months later Forum closed down. At the time it meant that, Vista, a Media24 publication, was the only local paper in the Welkom area.
Remedies proposed by the Commission and Media24, during the remedies hearing held in April this year, were not imposed due to their unsuitability. The Credit Guarantee Remedy was accepted by the Commission and Media 24 during the final stages of the hearing.