1 November 2011
A charge of predatory pricing against Media24 has been handed over to the Competition Tribunal for adjudication, the Competition Commission said on Monday.
This relates to the advertising rates which Media24 charged in two community newspapers in the Goldfields region of the Free State.
“The Competition Act prohibits predatory pricing which involves pricing below average or variable costs in order to exclude competitors in a market,” the commission said in a statement.
Berkina Twintig, trading as Gold-Net News, laid the complaint against Media24 in January – alleging that it was involved in anti-competitive pricing from 2004 to 2009.
During this period Media 24 operated two community newspapers, Vista and Goudveld Forum.
“The Commission’s investigation found that Media24 engaged in exclusionary pricing conduct through Goudveld Forum whereby its advertising rates were priced below cost.
“It further, found that this was intended to exclude competitors and to bolster Media24’s reputation as an aggressive competitor in order to reduce the likelihood of future entry into the community newspaper market.”
The Commission also found that Goudveld Forum was used as a “fighting brand” to prevent competition with Media24’s larger and more lucrative title, Vista.
Evidence before the commission revealed that Goudveld Forum budgeted for and operated at a loss over this period and was closed down in January 2010 after Gold-Net News had been driven out of the market.
The commission had also asked the tribunal to levy an administrative penalty of 10 percent on Media24’s turnover.
Responding to the referral, Media24 said it would continue to deny the allegations.
“Media24 has consistently denied any anti-competitive behaviour in this matter and will continue to do so in front of the Tribunal… We will thus oppose the recommendation by the Competition Commission to the Tribunal and are busy consulting with our legal team,” it said in a statement.