The Tribunal has confirmed a consent agreement (a “settlement”) between Media Credit Coordinators (“MCC”) and the Competition Commission (“the Commission”), in which MCC admits to price fixing and the fixing of trading conditions between March 2003 and December 2006, in contravention of the Competition Act.
 
The settlement follows a Commission investigation launched in 2011. It found that various media companies, through MCC, agreed to offer similar discounts and payment terms to accredited and non-accredited advertising agencies that place advertisements with MCC members. Accredited advertising agencies were offered a 16.5% discount whereas non-accredited advertising agencies were only offered a 15% discount.
 
The Commission found that these practices gave rise to a restriction of competition among competing companies in that they did not independently determine an element of price in the form of discount or trading terms – and concluded that these practices amounted to price fixing in contravention of section 4(1)(b)(i) of the Competition Act.
 
Terms of consent agreement
 
MCC agrees to cooperate with the Commission in subsequent proceedings in this matter. This includes, but is not limited to, the following: providing evidence; availing employees to testify in the matter; refraining from any prohibited practice in the future; and developing a competition law compliance programme as part of its corporate governance policy.
 
The Commission’s rationale for not pursuing an administrative penalty (a fine) against MCC is because MCC, as an association of media owners, is not a media owner itself (like its members) and is a non-profit entity that does not generate income of its own from advertising or publications. MCC is also in the process of winding down.
 
Historically, one of MCC’s functions was to hold money in trust for use by accredited media owners in situations where advertising agencies defaulted on their obligations to pay for advertisements; and media owners would be reimbursed from their earlier paid security amounts (which amounts were determined through risk assessments conducted by MCC and its credit assessment partners).
 
Background
 
There are a total of 31 respondents (“accused”) in this matter. The Tribunal has already approved 22 settlements in this same case between the Commission and various media companies including: DStv Media Sales; Independent Media; Caxton CTP Publishers Printers; Provantage; MTV Networks Africa; Randmark/Mediamark;  Media24; United Stations; Trudon; SABC; Primedia; Carpe Diem; and Mail & Guardian.
 
In the 22 consent orders confirmed by the Tribunal to date, the respondents respectively agreed to pay administrative penalties and undertook to contribute to an Economic Development Fund established by the Commission (together with the Media Diversity Development Agency) to enable the development of qualifying beneficiaries. The respondents also undertook to make available 25% bonus advertising space and/or airtime for every Rand of advertising space bought by a qualifying small agency.