Ster-Kinekor and SABC to pay massive fine for price fixing

Ster-Kinekor, Primedia, and the SABC have admitted to being involved in price fixing and have reached settlement agreements with the Competition Commission.

This follows an investigation initiated in November 2011 which found that the media companies colluded through the Media Credit Coordinators (MCC), with members offering discounts and payment terms to advertising agencies that placed advertisements with other members.

These agencies were offered a 16.5% discount for payments made within a certain period of the statement date, while non-members were only offered a discount of 15%.

Ster-Kinekor, the SABC, and Primedia were also found to have employed an intermediate company named Corex to perform risk assessments on advertising agencies to impose a settlement discount structure on the agencies.

The commission’s investigation found that these practices restricted competition among the companies, and that they fixed prices and trading terms in contravention of the Competition Act.

All three companies were ordered to pay administrative penalties, provide bonus advertising space to qualifying agencies, and contribute to the Economic Development Fund (EDF).

Fines ordered

The settlement agreement requires the SABC to pay a fine of R31.8 million and provide 25% bonus advertising space for every rand of space purchased by small agencies for the next three years.

This is capped at R40 million annually, amounting to a total sum of R120 million over the three-year period.

The SABC is also required to contribute R18.8 million to the EDF over the next three years.

Primedia agreed to pay an administrative penalty of R9.6 million and will also provide 25% bonus advertising space to qualifying agencies, capped at a value of R72 million over three years.

The company will also contribute R3.5 million to the EDF over a three-year period.

Ster-Kinekor’s settlement agreement will see it pay a fine of R437,000 and provide 25% bonus advertising space to qualifying agencies, capped at a value of R3 million for a period of three years.

Additionally, Ster-Kinekor will be required to contribute R157,000 to the EDF.

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Ster-Kinekor and SABC to pay massive fine for price fixing