The South African Broadcasting Corporation (SABC), Primedia and Ster-Kinekor have reached settlement agreements with the Competition Commission . This is after media companies admitted to being involved in price fixing and the fixing of trading conditions in contravention of the Competition Act.
In terms of the settlement agreements, the SABC will pay an administrative penalty of close to R32 million and will also provide 25% bonus advertising space for every rand of advertising space bought by qualifying small agencies, over three years and capped at R40 million annually.
This will amount to R120 million for the entire period. The corporation will further contribute close to R17 million to the Economic Development Fund (EDF) over a three year period.
Primedia has agreed to pay an administrative penalty of more than one million and will also provide 25% bonus advertising space for every rand of advertising space bought by qualifying small agencies, over three years and capped at R24 million annually, amounting to R72 million in three years.
The company will also contribute more than R3 million to the Economic Development Fund over a three year period.
Ster-Kinekor has agreed to pay a fine of more than R400 000. It will also provide 25% bonus advertising space for every rand of advertising space bought by qualifying small agencies, over three years and capped at R 1 million annually, totalling R3 million .
The company will contribute more than R150 000 to the EDF over a three year period. The EDF will be managed and administered by Media Development and Diversity Agency (MDDA).
The case relates to an investigation that was initiated in November 2011 which found that, through the 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 services of an intermediary company called Corex to perform risk assessments on advertising agencies for purposes of imposing 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 settlement agreements have been referred to the Competition Tribunal for confirmation.