South Africa: DStv hit with price fixing fine

Naspers’ pay-TV operation DStv’s ad sales unit DStv Media Sales has admitted to price fixing and the fixing of trading conditions in contravention of South Africa’s Competition Act. The matter relates to a November 2011 investigation which found that, through the Media Credit Co-Ordinators (MCC), various media companies agreed to offer similar discounts and payment terms to advertising agencies that place advertisements with MCC members.

In terms of the consent agreement filed with South Africa’s Competition Tribunal today, DStv Media Sales has agreed to an accumulative remedy of R180 million (€12,4m). It has agreed to pay an administrative penalty amounting to R22,262,599.

The company will also pay R8,000,000 to the Economic Development Fund over three years, to enable the development of black owned small media or advertising agencies requiring assistance with start-up capital and to assist black students requiring bursaries to study media or advertising, among others. This will be managed by the Media Development and Diversity Agency (MDDA) and audited annually.

DStv Media Sales has further agreed to provide 25 per cent in bonus airtime for every Rand of airtime bought by qualifying small agencies. This aims to help smaller agencies participate in the market. The bonus airtime will be provided for a period of three years and is subject to a total annual airtime cap of R50,000,000.

MCC-accredited agencies were offered a 16.5 per cent discount for payments made within 45 days of the statement date, while non-members were offered 15 per cent.

The Commission found that the practices restricted competition among the competing companies as they did not independently determine an element of a price in the form of discount or trading terms. This amounts to price fixing and the fixing of trading conditions in contravention of the Competition Act.

The Commission has filed the consent agreement with the Competition Tribunal for confirmation as an order by the Tribunal.

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