Two print media companies have concluded consent agreements with the Competition Commission and agreed to pay fines amounting to millions of rands after admitting to participating in price fixing and the fixing of trading conditions in contravention of the Competition Act.
The two separate agreements were confirmed as orders of the Competition Tribunal on Friday.
Under the terms of its agreement with the commission, Caxton has agreed to a penalty of R5.81-million and has agreed to several remedies, including the payment of R2.09-million to the Economic Development Fund over three years.
It will also provide 25% in bonus advertising space for every rand of advertising space bought by qualifying small agencies. This will be for three years, capped at R15-million a year.
Independent Media has, meanwhile, agreed to pay an administrative penalty R2.22-million, as well as to contribute R799 417 to the Economic Development Fund over a three-year period. It, too, will provide 25% bonus advertising space for every rand of advertising space bought by qualifying small agencies. This will be for three years, capped at R5-million a year.
Independent Media will also obtain its own credit insurance so that small agencies are not required to commit any securities or guarantees in order to book airtime or advertising space.
The matter relates to a November 2011 investigation by the commission, 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, while nonmembers were offered a 15% discount.
In addition, the commission found that the implicated companies employed the services of an intermediary company 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 an element of a price in the form of discount or trading terms. This amounts to price fixing and the fixing of trading conditions in contravention of the Competition Act.