South Africa's Competition Tribunal has fined MultiChoice's advertising sales division, DStv Media Sales, a massive R180 million for price fixing and fixing trading conditions that's against South Africa's Competition Act.
The Competition Tribunal fined MultiChoice's DStv Media Sales R22,3 million. MultiChoice will also have to pay the Economic Development Fund R8 million over 3 years. In addition DStv Media Sales willhave to pay 25% in bonus airtime for ever R1 of airtime bought by qualifying smaller ad 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 R50m," says the Competition Tribunal in a statement.
The hefty fine concludes an investigation from November 2011 that 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.
MCC accredited agencies were offered a 16,5% discount for payments made within 45 days of the statement date, while non-members were offered 15%.
This practice restricted competition the Competition Commission found, 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".
MultiChoice says DStv Media Sales engaged in a longstanding practice that was used in South Africa's advertising industry.
"The Competition Commission has now concluded its investigation and found that this practice does indeed contravene the Competition Act. DStv Media Sales cooperated with the Competition Commission in its investigation and has accepted responsibility for being party to this industry practice."
