MEDIA STATEMENT: Paarl Media successfully won a bid to acquire Primedia@Home, the direct to home leaflet distribution business from Primedia, in October 2010.
Having been unsuccessful in convincing the Competition Commission of the anti-competitive effects of the merger between Paarl Media andPrimedia@Home, Caxton appealed to the Competition Tribunal to review the Commission’s decision that gave the merger unconditional approval on January 31, 2011.
The Competition Tribunal set down a public hearing for the review application that took place on Tuesday 31 May 2011.
According to Jacques Coetzee, general manager of Shopper’s Friend, it was at this review hearing that Caxton attacked the rationality and impartiality of the Competition Commission, slating it for unconditionally approving the merger and calling the Commission “irrational and incoherent, incapable of reaching an impartial and objective decision, stubborn and closed-minded”.
Coetzee says Caxton is clearly desperate to derail the success of a unique new product launched by PaarI Media in competition with free papers. “The background is quite simple – during May 2010 Paarl Media launched an innovative product called the Shopper’s Friend Adpaper for distribution to 2.2 million Gauteng households weekly. This product combines the best features of newspapers, magazines and direct to home leaflet distribution, and is a very attractive offering to advertisers wishing to distribute leaflets.
“Caxton, which controls more than 80% of leaflet distribution in the Gauteng market, saw this as a direct attack on its market share and has engaged in various unconventional business tactics to retaliate.
“Caxton’s nightmare got worse when Paarl Media successfully won a bid to acquire Primedia@Home, the direct to home leaflet distribution business from Primedia in October 2010.”
Stephen van der Walt, CEO of Paarl Media, says his company’s objective in acquiring Primedia@Home is straightforward. “We did not have our own network to distribute Shopper’s Friend and had to outsource this vital function. In addition, Paarl Media is now in a position to offer national direct to home leaflet distribution to all our clients. So we are offering the benefits of an adpaper in Gauteng and direct to home leaflet distribution nationally.
“Since acquiring Primedia@Home we have merged the business into Shopper’s Friend, have ordered a complete new fleet of vehicles with the latest safety features, are recruiting more staff to expand, and are investing in the latest systems to provide a compelling offering to advertisers.”
Coetzee says although the acquisition of Primedia@Home was a small merger, Paarl Media and Primedia decided to voluntarily notify the Competition Commission of the transaction.
“Even before the filing could be submitted to the Commission, Caxton cried foul and rushed off to the Competition Commission alleging that the transaction would be anti-competitive. Ironically, Caxton is the dominant distributor of leaflets direct to consumers’ homes through its free newspapers.
“After an intensive three month investigation by the expert team of attorneys and economists at the Competition Commission, the merger was given an unconditional approval on January 31, 2011. The Commission probably saw in the first instance, this is nothing more than Caxton attempting to prevent competition that might erode its own dominance.”
The Competition Tribunal will rule on the appeal from Caxton on a date to be confirmed.