The Competition Commission has referred 28 media companies, including the Mail and Guardian, to the Competition Tribunal for prosecution on charges of price fixing and fixing of trading conditions.
Caxton, Independent Newspapers and Dstv have already pleaded guilty to the charges and agreed to pay an administrative penalty totalling more than R30-million.
The investigation started in 2011 and found that media companies, using the Media Credit Coordinators, offered similar discounts and payment terms to advertising agencies. This in effect squeezed out smaller advertising agencies.
The commission also found that the implicated companies used an intermediary in Corexalance (Corex) to perform risk assessments on advertising agencies in order to impose a settlement discount structure and terms.
This, the commission contends, essentially fixed the price and trading terms, in effect restricting competition.
As part of the reparation agreed to with the three companies who plead guilty, the media companies will contribute to the Economic Development Fund which aims to develop small black owned media and advertising agencies. It also seeks to offer bursaries to black students wishing to study media or advertising.
Other media houses and advertising agencies implicated in the case include Media 24, Primedia, Avusa, SABC, Condé Nast, United Stations and Trudon.
“This is one of the legacy media practises that survived the introduction of the Competition Act in South Africa. It is a problem because it consolidates operations of a few media houses that gang up against mainly small advertising agencies,” said Competition Commissioner Tembinkosi Bonakele.