DStv explains why commission fined it millions for price fixing

2017-05-26 08:23
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DStv remote control. (Duncan Alfreds, Fin24)

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Cape Town – MultiChoice said the Competition Commission’s price fixing fine against DStv Media Sales, with an accumulative remedy of R180m, concerned a “long-standing practice” that no longer occurs.

“The Competition Commission investigated a long-standing practice used across the media industry which DStv Media Sales followed,” MultiChoice said in a statement on Thursday.

“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.

“The company has agreed to pay a penalty, which includes cash and a package of remedies supporting BBBEE agencies.

“The company has already made the required changes to this industry wide practice,” it said.

Earlier on Thursday, the Competition Commission said that DStv Media Sales admitted to price fixing and the fixing of trading conditions in contravention of South Africa’s Competition Act.

DStv Media Sales agreed to an accumulative remedy of R180m, which includes an administrative penalty of R22.26m and an R8m payment to the Economic Development Fund, which will be used for the development of black owned small media or advertising agencies.

DStv Media Sales will also provide 25% in bonus airtime for every rand of airtime bought by qualifying small agencies.

“This aims to help smaller agencies participate in the market,” the commission said. “The bonus airtime will be provided for a period of three years and is subject to a total annual airtime cap of R50m.”

In November 2011, an investigation found that various media companies agreed to offer similar discounts and payment terms to advertising agencies that place advertisements with Media Credit Co-Ordinators (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%, the commission explained.

The commission said it found 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,” it said.