The Competition Commission is putting over R6.3 million in the hands of the controversial Media Development and Diversity Agency (MDDA) – and that’s just the first of three instalments.
This after the former selected the latter to oversee its Economic Development Fund, created as a result of the Commission’s investigation into cartel-like behaviour and collusion by media companies.
So far five media companies – Caxton, Independent Media, DStv, Provantage and most recently, Media24 – have settled with the Competition Tribunal, admitting to price-fixing and the fixing of trading conditions. They will pay millions in fines, and into Economic Development Fund set up by the CompCom.
Each company will make three equal instalments, the first contribution of which must be made within 30 days of the date of confirmation by the Tribunal. The next two instalments will be paid on the anniversary of the first over the three-year period.
Here is a breakdown of each of the first instalments paid into the fund, which totals over R6.3 million (the full amounts to be paid are in brackets):
Media24 – R1 659 467.07 (R4 978 401.21)
Caxton – R696 826.82 (R2 090 480.45)
Independent Newspapers – R266 472.33 (R799 417.00)
DStv – R2 666 666.67 (R8 000 000.00)
Provantage – R131 306.70 (R393 920.12)
Total: R5 420 739.59
Doing the maths, once all the instalments have been paid by these five companies, the fund will total R16 262 218.78, and that is without contribution of any of the other media companies the Tribunal has referred for prosecution, who haven’t yet settled. To summarise, this is a fund with serious money, which needs proper management.
Read more: Caxton and Independent fined millions
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Read more: Of competition, cartels and corporate leniency
Read more: Media houses guilty of price-fixing
Why pick the MDDA?
Asked this question, the Competition Commission’s head of communications Sipho Ngwema, replied, “Given the impact of the cartel conduct to the small, particularly black, media and advertising agencies, we had to look for a vehicle that is entrusted with development and empowerment of small media enterprises. This falls squarely into the mandate of the MDDA”.
Ngwema listed the key responsibilities of the agency, including to:
- Create an enabling environment for media development and diversity which reflects the needs and aspirations of all South Africans.
- Redress exclusion and marginalisation of disadvantaged communities and persons from access to the media and the media industry.
- Promote media development and diversity by providing support primarily to community and small commercial media projects.
- Encourage ownership and control of, and access to, media by historically disadvantaged communities as well as by historically diminished indigenous language and cultural groups.
- Encourage the development of human resources and training, and capacity building, within the media industry, especially amongst historically disadvantaged groups.
- Encourage the channelling of resources to the community media and small commercial media sectors.
- Raise public awareness with regard to media development and diversity issues.
“Thus, the MDDA is the most suitable agency to oversee the fund. As mentioned, our considerations are essentially based on the MDDA’s mandate. In terms of our agreement, we think the MDDA is capable of executing it in this regard,” added Ngwema.
Protection measures still to be ironed out
So what safety measures have been put in place to ensure the fund is properly managed and none of the money goes missing or is wasted?
“We have a Memorandum of Understanding (MOU) with the MDDA in terms of how it shall manage the fund and account for it. We have an oversight responsibility in terms of this agreement,” Ngwema confirmed.
But worryingly, acting CEO of the MDDA, William Baloyi, said that while the agency had been kept abreast of the developments around the Commission’s findings into price fixing and the use of subsequent fines for an Economic Development Fund, the agency still had to meet with the Commission “to finalise the exact details of how the fund will be managed”. The meeting has yet to be setup, but the MDDA said it would happen before the end of March – just a few days away.
“Issues such as concern around the MDDA’s capacity to manage the Economic Development Fund will be discussed with the Competition Commission to enable a mutually agreed strategy to be implemented by the MDDA that will ensure successful management of this fund and delivery of the benefits to the black-owned media and advertising sectors as envisaged by the Competition Commission in setting up the fund,” Baloyi added.
A proven track record
Asked why he believed the MDDA was chosen to manage the fund, Baloyi said, “It’s as a result of our proven track record in granting and managing funds for community media projects, particularly those that are black-owned and located in historically disadvantaged areas. The MDDA awarded its first funds to a community media project in 2004 and in subsequent years has supported more than 250 community broadcast and print projects, contributing significantly to the diversification of the media sector in South Africa and the growth of a robust community media sector.”
But both players in the media industry and politicians have questioned activities at the agency, citing irregularities and concerning spending of funds it manages as examples of poor business practices and management. Commenting ahead of a looming Parliamentary probe into the agency, communications portfolio committee chairperson Humphrey Maxegwana said visits to the MDDA’s offices in KwaZulu-Natal and community media in the province showed “that the government is pumping money into a bottomless pit so the money is going down the drain. There is nothing that is of benefit to most community radios we visited”.
The EFF’s Mbuyiseni Ndlozi described the MDDA as “completely dysfunctional” adding, “It is our view that the MDDA board must be disbanded and a new board constituted,” while ANC’s Mziwamadoda Kalako called the MDDA a “problem child” falling under the communications department.
Commission encouraging payment into the fund
But despite doubts around the MDDA, the Competition Commission is still encouraging the media companies the Tribunal is prosecuting to settle their cases and hence pay into the fund.
“We are encouraged by the companies that came forward and assisted the Commission in this investigation. We are pleased by the media companies that have admitted guilt and concluded consent agreements with us so far… Further, we have insisted that the remedies also focus on the development and removal of artificial barriers to entry for small agencies. This is an important part of our work because SMME empowerment is critical for a growing and inclusive economy. Thus, the Economic Development Fund (and the advertising discounts) becomes very important,” it said.
“We urge those who contemplate settling to do so soon because we have now referred the complaint for prosecution and the process will now be in the Competition Tribunal’s hands. We will get to a point where it will be impractical to reach consent agreements. In addition, settlements get stiffer as time lapses. It is important to mention that those who have opted not to settle have every right to defend themselves at the Tribunal.”
Michael Bratt is a multimedia journalist at Wag the Dog, publishers of The Media Online and The Media. Follow him on Twitter @MichaelBratt8
