The Competition Tribunal will next week hear a case against Media24, alleging that it intentionally pushed a community newspaper competitor out of the market.
From Wednesday, 6 November, the Competition Tribunal will hear a complaint brought by the Competition Commission against Media24, the tribunal announced in a statement on Thursday.
The media giant stands accused of deliberately driving a competitor, Gold-Net News, out of the market between 2004 and 2009 in order to secure advertising space in community newspapers. It did this by allegedly positioning a competing community newspaper, Goudveld Forum, against Gold-Net News, and running it at a loss until Gold-Net News shut down in 2009.
“Having succeeded with this strategy, the Commission alleges, Media24 closed Goudveld Forum in January 2010 and either retrenched Goudveld Forum staff or redeployed them to other Media24 publications, including Vista which operated in the same geographic area as Gold-Net News and Goudveld Forum,” the tribunal said in a statement.
Media24 has denied all the allegations.
“Media24 has denied the Commissions allegations saying, amongst other things, that Goudveld Forum covered its costs during the 2004-2009 period and that there was no truth to the allegation that Media24 kept Goudveld Forum open in order to inhibit or deter competition with Vista,” said the tribunal.
“Media24 also denied that Gold-Net News closed down due to anti-competitive strategies on Media24’s part citing the 2008 economic downturn and other possible reasons for Gold-Net News‘ decline.”
Gold-Net News filed a case with the Competition Commission against Media24 in 2009. It said that Media24 “drastically reduced” its advertising rates to a lower level than its production and overhead costs, which forced Gold-Net News to do the same. The result was that its advertising rates went down to unsustainable levels.
The Competition Commission investigated and concluded that Media24’s conduct was in contravention of the Competition Act, which does not permit companies to charges unjustifiably low prices. The commission said that as a result, advertisers and readers were deprived of the benefit of competition between community newspapers in the Goldfields area, which comprises Welkom, Odendaalsrus, Allanridge, Riebeeckstad, Virginia, Henneman, Bronville, Jerusalem, Wesselbron, Bultfontein, Theunissen, Ventersburg, Thabong, Meloding, Kutluanong and Phomolong.
The tribunal hearing is set to happen between 6 and 29 November.
“The Tribunal expects to hear testimony from 10 witnesses on behalf of Media 24 and seven witnesses testifying on the Commission’s behalf including Wian Bonthuyzen, a former Media24 employee who operated in the Free-State and Northern Cape area.
“Cases alleging below-cost pricing are rare in competition matters and this is the first such case to be referred to the Tribunal, by the Commission, in its 14 year history,” said the tribunal.
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