Out of home company, Provantage Media Group, has reached a settlement agreement with the Competition Commission in terms of an order by the Competition Tribunal.
The settlement relates to the Commission’s investigation, initiated in 2011, into the conduct of 28 media companies, specifically those firms that were members of the Media Credit Co-ordinator (MCC) and/or used the credit vetting services of CoreXalance. The Commission’s argument is that these firms fixed prices in the form of discounts granted to accredited and unaccredited advertising agencies based on if payments were made within specified periods. MCC accredited agencies were offered a 16.5% discount, while non-members were offered 15%.
In terms of the settlement agreement, Provantage has agreed to:
- Pay an administrative penalty of R1 094 222.56 to the Commission;
- Grant bonus advertising space or discounts to qualifying small agencies (as defined in the settlement agreement with the Commission) for a period of three years; and
- Contribute an amount of R393 920.12 to the Economic Development Fund to enable the development of qualifying beneficiaries.
In a statement Provantage said, “We have voluntarily and actively engaged with the Commission in this investigation from the moment we became aware of being implicated in the conduct and have taken a commercial decision to settle the matter in the interest of finality.
“We are committed to conducting our business in compliance with the highest legal and ethical standards and are committed to ensuring that it does not transgress the laws of South Africa, including competition laws.”
An error that could cause later interpretation issues in respect of the settlement agreement was identified during a hearing before the Tribunal involving representatives from Provantage and the Commission. The error was rectified and Provantage expects to receive the Tribunal’s consent order confirming the settlement agreement in due course.
Describing what the matter is all about Competition Commissioner, Tembinkosi Bonakele, said, “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. It is encouraging that some media houses have settled the matter and will also be directly contributing towards promoting the entry of small and black advertising agencies.”
Previous settlement agreements concluded
Provantage joins Caxton & CTP Publishers and Printers, and Independent Media who have already concluded settlement agreements with the Commission.
Caxton agreed to pay a fine of R5 806 890.14, and R2 090 480.45 to the Economic Development Fund over three years. It would also provide 25% bonus advertising space for every rand of advertising space bought by qualifying small agencies. This will be for three years, capped at R15 000 000 per annum.
Independent Media, meanwhile, agreed to pay an administrative penalty of R2 220 603 and will contribute R799 417 to the Economic Development Fund over a three-year period, and provide 25% bonus advertising space for every rand of advertising space bought by qualifying small agencies, over three years and capped at R5 000 000. Independent also said it would obtain its own credit insurance so small agencies are not required to commit any securities or guarantees in order to book advertising space.
On the other hand, Primedia indicated it intends fighting the charges, while Associated Media Publishing and Media24 are still studying the Commission’s ruling.