Business

South African Competition Commission Orders Media Companies To Pay Massive Fines For Price Fixing

Ster-Kinekor, Primedia, and SABC have admitted resorting to price fixing and the fixing of trading conditions

The South African Competition Commission has ordered three media companies Ster-Kinekor, Primedia, and the South African Broadcasting Corporation (SABC) to pay hefty fines after they admitted to resorting to price fixing and the fixing of trading conditions in contravention of the Competition Act.

“The three media companies admitted to being involved in price-fixing and the fixing of trading conditions in contravention of the Competition Act,” Sipho Ngwema, the commission spokesperson, said on Sunday.

The investigation that began in November 2011 found that Ster-Kinekor, Primedia, and the SABC offered similar discounts and payments to advertising agencies who placed advertisement via Media Credit Co-Ordinators (MCC). The MCC-accredited agencies were offered a discount of 16.5 percent if payments were made within 45 days, while other agencies were offered a discount of 15 percent.

It also came to light that the implicated companies used an intermediary company called Corex to perform risk assessments on advertising agencies for imposing a settlement discount structure and terms on advertising agencies.

The Competition Commission has ordered all three companies to pay administrative penalties, provide bonus advertising space to qualifying agencies, and contribute to the Economic Development Fund (EDF).

As part of the settlement agreement, the SABC will pay a fine of R31.8 million and provide 25 percent bonus advertising space for every rand of space purchased by small agencies for the next three years, capped at a value of R40 million over the next three years. It is also required to contribute R18.8 million to the EDF over the next three years.

Primedia will pay an administrative penalty of R9.6 million and provide 25 percent bonus advertising space to qualifying agencies, capped at a value of R72 million over three years. The company will contribute R3.5 million to the EDF over a three-year period.

Ster-Kinekor will pay R437,000 in administrative fees and provide 25 percent bonus advertising space to qualifying agencies, capped at a value of R3 million for a period of three years. The media company will be required to contribute R157,000 to the EDF.

Caroline Finnegan

A professionnal journalist for the past ten years, I cover global news and economic affairs for The Chief Observer.

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