A DVD rental storeowner in the United States wants a copy of the Oscar-winning film The Aviator. Obtaining it is as easy as purchasing it online from Amazon.com at a retail price of $18,82 (R124,21) and then renting it out to paying customers.
But, in South Africa it’s not quite that easy. The film, which is distributed by Ster Kinekor Filmed Entertainment, is sold to rental stores for rental purposes at a price of R507,30 while retailed to the general public at an average price of R150.
The video/DVD rental store in South Africa pays nearly five times that of its US counterpart.
The Competition Commission announced last week that because of perceived non-compliance with an undertaking of the commission, signed last year by Nu Metro and Ster Kinekor, it was recommending further investigation into the video and DVD distributors, which together hold a 95% share of the market.
Last year’s investigation was launched in response to a complaint lodged in 2002 by Brian Bataille, the owner of a number of video rental stores in Durban operating under the name of Videosun.
The undertakings signed by the distributors in 2004 include, among a range of promises, “to not engage in any conduct, whether in relation to retail or rental product, which is prohibited as price discrimination”.
Bataille remains unhappy with Nu Metro and Ster Kinekor’s non- compliance with the signed undertakings. He approached Democratic Alliance MP Dianne Kohler Barnard, who in turn took the matter to the Department of Trade and Industry, resulting in the reopening of the investigation.
Competition Commission compliance manager Zodwa Ntuli says: “There are allegations that they [Nu Metro and Ster Kinekor] have not complied with the undertakings. We are investigating these issues as the initial investigation last year was not completed because of the signing of the undertakings.
“The issues that have been raised are not only related to the investigation last year; there are new allegations.”
The commission would not elaborate on the nature of the new charges as these were still under investigation.
Bataille has provided the Competition Commission with two boxes of evidence he has compiled to prove his claims that distributors have failed to comply.
“They do exactly what they like. If God came to South Africa, he wouldn’t be top, there would be Nu Metro and Ster Kinekor above him,” says Bataille.
A key issue in Bataille’s complaint is that the distributors have done away with the window period whereby retail businesses could only purchase a DVD title six months after the rental companies.
“We were paying R462,38 for a Nu Metro DVD and R507,30 for a Ster Kinekor DVD. They justified that price using the six-month window. Now, they have taken the window away,” says Bataille.
Compact Disc Warehouse, a retailer in Rosebank, confirmed to the Mail & Guardian that it had received stock of The Aviator on June 13 while Blockbusters Video, a rental company in Fourways Mall, confirmed that it had received its rental copies on June 15.
Another complaint of Bataille’s is the new trading terms distributed to video rental businesses by Nu Metro at the beginning of June, which he insists have a number of questionable clauses.
One of the clauses prohibits rental stores from allowing potential customers an opportunity to preview a title. Bataille argues that this takes away a crucial marketing tool for his business.
“To top it all, these small businesses have been handed contracts by Nu-Metro that are so restrictive they wouldn’t have been out of place in Stalinist Russia, and they have been told that if they fail to sign by June 30 their accounts will be shut down,” says Barnard.
“They are bullying people into signing it. Half of the industry has not signed at this point,” says Bataille.
The M&G attempted to contact both Nu Metro and Ster Kinekor for comment but they failed to return any of our calls.