Business Day

Com­mis­sion study­ing preda­tory pric­ing rul­ing

- ANN CROTTY Writer at Large Competition Commission · Belarus · Iceland · Austria · Belgium · Paarl · Nationwide Independent Financial Services Limited · South African Airways · Media24 · Welkom · Competition Act

THE Com­pe­ti­tion Com­mis­sion said on Wed­nes­day it was still study­ing the reme­dies set down by the Com­pe­ti­tion Tri­bunal in the prece­dent-set­ting preda­tory pric­ing case against Me­dia24.

The com­mis­sion, which asked for much tougher reme­dies, is en­ti­tled to ap­peal against the tri­bunal’s rul­ings.

Dur­ing the tri­bunal’s hear­ing into the reme­dies, the com­mis­sion sought an in­ter­dict against Me­dia24 pre­vent­ing it from pub­lish­ing a fur­ther ti­tle in the Gold­fields area for six years.

It also called for Me­dia24 to spon­sor a new ri­val in the area at a cost of R10m. The R10m was to be ad­min­is­tered by the Me­dia Di­ver­sity De­vel­op­ment Agency for three years.

Me­dia24 said it was tak­ing ad­vice from its le­gal team. “This has been a com­plex mat­ter and is the first time a con­tra­ven­tion of this na­ture has been pros­e­cuted by the com­pe­ti­tion au­thor­i­ties.” The group’s Anika Ebrahim said the com­pany would pub­lish the rem­edy’s terms and ex­pla­na­tion in two news­pa­pers by 26 Septem­ber, as re­quired by the tri­bunal.

The tri­bunal re­jected the com­mis­sion’s sug­gested reme­dies. It also re­jected Me­dia24’s pro­posal to spend less than R1m train­ing “would-be jour­nal­ists” in a bid to rem­edy the ef­fect of its preda­tory pric­ing on me­dia com­pe­ti­tion in the Gold­fields area near Welkom.

In its re­cently re­leased or­der, the tri­bunal de­scribed Me­dia24’s pro­posed rem­edy as “re­mark­ably mea­gre” and in­stead ruled that the me­dia group pro­vides 90-day credit fa­cil­i­ties for the print­ing and dis­tri­bu­tion needs of cur­rent and new en­trants to the mar­ket. This is the first time in its 17-year his­tory the tri­bunal has set down a rem­edy for preda­tory pric­ing.

The credit fa­cil­i­ties are to cover the cost of print­ing and dis­tri­bu­tion for any com­mu­nity news­pa­per in the Gold­fields’ mar­ket. The credit will be pro­vided by print­ing com­pany Paarl Cold­set and door-to-door dis­trib­u­tor OnTheDot, which are as­so­ci­ates of Me­dia24. The credit fa­cil­ity must be avail­able for three years.

The un­usual terms of the tri­bunal’s rem­edy re­flect the un­usual cir­cum­stances sur­round­ing the case. In Septem­ber 2015, in the first rul­ing of its kind, the tri­bunal found that Me­dia24 used preda­tory pric­ing to drive an in­de­pen­dent com­mu­nity news­pa­per out of busi­ness.

The case in­volved a bat­tle for dom­i­nance in the Welkom mar­ket and Me­dia24’s ac­tions were judged to have re­sulted in the per­ma­nent re­moval of a vi­brant in­de­pen­dent com­peti­tor, Gold Net News (GNN).

In its rul­ing a year ago, the tri­bunal said Me­dia24 had used one of its two Welkom-based com­mu­nity news­pa­pers, Fo­rum, as a “fight­ing brand” to en­sure GNN could not sur­vive. Fo­rum charged ad­ver­tis­ing rates that were be­low its costs and for a lengthy pe­riod op­er­ated at a loss. Ten months af­ter GNN was fi­nally forced to close, Fo­rum also closed leav­ing Me­dia24’s sec­ond pa­per, Vista, in a dom­i­nant po­si­tion. This al­lowed Vista to raise its ad­ver­tis­ing rates.

Me­dia24 is the first com­pany to be found guilty of preda­tory pric­ing in terms of the Com­pe­ti­tion Act. In an ear­lier case of pre­da­tion brought by Na­tion­wide Air­ways against SAA, no fi­nal rul­ing was made.

The tri­bunal could not levy a fine against Me­dia24 be­cause the charge of preda­tory pric­ing was in terms of sec­tion 8(c) of the Com­pe­ti­tion Act, for which no first-time fines can be levied.

Tri­bunal mem­ber Yas­min Car­rim said the mar­ket con­tin­ued to be un­com­pet­i­tive and it was clear that ma­jor chal­lenges for cur­rent and po­ten­tial ri­vals to Me­dia24 were the ex­pense of print­ing and dis­tri­bu­tion.

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