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Johannesburg - The Competition Commission on Monday referred a case of predatory pricing against Media24 to the Competition Tribunal for adjudication.
The Competition Act prohibits predatory pricing, which involves pricing below average or variable costs in order to exclude competitors in a market.
The case relates to advertising rates charged by Media24 in the community newspaper market in the Goldfields region of the Free State.
The commission's referral follows a complaint that was lodged by Berkina Twintig trading as Gold-Net News on January 30 2009, in which it alleged that Media24 had engaged in predatory pricing, which resulted in Gold-Net News exiting from the market in 2009.
It was alleged that the anti-competitive pricing occurred in January 2004 to February 2009, and during this period Media24 operated two community newspapers, namely Vista and Goudveld Forum, in the Goldfields area.
The commission's investigation found that Media24 engaged in exclusionary pricing conduct through Goudveld Forum whereby its advertising rates were priced below cost.
The investigation also showed that this was intended to exclude competitors and bolster Media24's reputation as an aggressive competitor to reduce the likelihood of future entry into the community newspaper market.
The commission concluded 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 has asked the tribunal to levy an administrative penalty of 10% on Media24's turnover.
* Fin24 is a Media24 publication.
The Competition Act prohibits predatory pricing, which involves pricing below average or variable costs in order to exclude competitors in a market.
The case relates to advertising rates charged by Media24 in the community newspaper market in the Goldfields region of the Free State.
The commission's referral follows a complaint that was lodged by Berkina Twintig trading as Gold-Net News on January 30 2009, in which it alleged that Media24 had engaged in predatory pricing, which resulted in Gold-Net News exiting from the market in 2009.
It was alleged that the anti-competitive pricing occurred in January 2004 to February 2009, and during this period Media24 operated two community newspapers, namely Vista and Goudveld Forum, in the Goldfields area.
The commission's investigation found that Media24 engaged in exclusionary pricing conduct through Goudveld Forum whereby its advertising rates were priced below cost.
The investigation also showed that this was intended to exclude competitors and bolster Media24's reputation as an aggressive competitor to reduce the likelihood of future entry into the community newspaper market.
The commission concluded 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 has asked the tribunal to levy an administrative penalty of 10% on Media24's turnover.
* Fin24 is a Media24 publication.
