Media24 has agreed to pay R14m as a settlement agreement with the Competition Commission after admitting to price fixing and fixing of trade conditions in the media industry.
The tribunal began its investigation in late November 2011, and found that Media24, alongside 27 other media companies, contravened the Competition Act by offering discounts or payment terms to advertising agencies which advertise with Media Credit Co-ordinators (MCC) members.
The tribunal found that MCC-accredited agencies were offered a 16.5% discount, while non-members were offered a 15% discount.
According to a statement released by the Competition Commission on Friday, Media24 agreed to pay an administrative penalty of R13.8m and will contribute R4.9m to the Economic Development Fund (a fund which seeks to develop small black-owned media businesses and media graduates) over three years.
Media24 also agreed to provide a 25% bonus advertising space for every rand of advertising space, purchased by small agencies which qualify. This will be over three years and is capped at R35m annually.
The other companies charged with and admitted to price fixing and fixing of trading conditions (so far) include Provantage Media, which will pay a R1m settlement agreement.
Meanwhile, Caxton and CTP Publishers and Printers, Independent Media and DStv Media Sales have all agreed to pay administrative penalties of R5.8m, R2.2m and R22.2m, respectively.
The tribunal found that companies charged for fixing prices and trading conditions in the industry have contravened the Competition Act by restricting competition between the competing companies by not independently determining the discounts but fixed prices instead.
“It is a problem because it consolidates operations of a few media houses that gang up against mainly small advertising agencies. It is encouraging that some media houses have settled the matter and will also be directly contributing towards promoting the entry of small and black advertising agencies,” said Competition Commission head Tembinkosi Bonakele in a statement.
- This article was originally published on Moneyweb and is used here with permission