1
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 92/CR/Oct11
(016204)
In the matter between:
THE COMPETITION COMMISSION APPLIC ANT
And
MEDIA24 (PTY) LTD RESPONDENT
Panel: Norman Manoim (Presiding Member)
Yasmin Carrim (Tribunal Member)
Andreas Wessels (Tribunal Member)
Heard on: 18 February 2013 and 08 March 2013
Order issued on : 28 March 2013
Reasons issued on: 28 March 2013
REASONS FOR THE DECISION
Introduction
[1] This is an application by the Competition Commi ssion (“Commission”) to
amend its complaint referral by way of a supplementary affidavit.
[2] The case concerns allegations of predatory pric ing by two publications owned
by Media24 (Pty) Ltd (“Media24”), known as Forum an d Vista, that both
operate in several geographical markets in the Free State known locally as
the Goldfields area.
2
[3] The Respondent, Media24, opposes the applicatio n as it contends that the
amendment will introduce material into the referral that is excipiable on the
basis that it fails to disclose a cause of action, alternatively that it is vague and
embarrassing. This decision deals with this argument.
Reason for the application
[4] The application has come late in the history of a case bedevilled by procedural
disputes. 1 The complaint was initiated by a complainant on 3 0 January 2009
and referred to the Tribunal by the Commission on 3 1 October 2011.
Media24 filed an answer to that on 19 January 2012. Ordinarily, that filing
would have signalled a close of pleadings. During the period subsequent, the
Commission made various applications for discovery that were in some
respects contested by Media24. The Commission prev ailed in respect of
compelling discovery of some documentation, most re cently in December
2012. The Commission says that as a result of the newly discovered
documents, consultations with new witnesses not pre viously available to it
and consultations with its external economic expert advisors, it is seeking to
refocus certain aspects of its case not previously apparent to it at the time of
the referral. 2
[5] Media24 has not seriously disputed the Commissi on’s justification for the
amendment, although it alleges it is prejudiced by its late submission. We
consider the reasons for the delay have been adequa tely explained in the
context of a case of this complexity. Whilst Media 24 is further burdened in its
defence by having to respond to a supplementary aff idavit, after it has already
filed an answer to the complaint referral, it has n ot persuaded us that this
additional burden, is so disproportionate to the ef forts it already has to make,
in any event, in defending such a case, that it should not be allowed.
1 See an earlier decision of ours in relation to a summons issued by the Commission in the same
matter. ( Media24 Ltd and another v Competition Commission of South Africa and others [2010] 2
CPLR 418 (CT)). In addition, there have been several disputes over discovery.
2 See Commission’s Application to file supplementary affidavit, paragraph 17. The Commission also
says the information it now has was not previously present in the financial data it received from
Media24.
3
[6] Thus we consider the reasons for the lateness o f the application have been
adequately explained and we go on to consider the merits of the exceptions.
[7] At the outset it is worth recording what is not in dispute. Media24 does not
dispute that the Commission is entitled to bring an amendment by way of a
supplementary affidavit. 3 The Commission does not dispute that if the
supplementary affidavit contains material that is e xcipiable, a respondent is
entitled to object to it being permitted as an amendment.
[8] What is in dispute is whether the ‘further part iculars’, as they are styled by the
Commission, are excipiable.
Tribunal’s approach to exceptions
[9] The Tribunal has in previous decisions recognis ed the utility of upholding
exceptions in appropriate cases for the same reason s that civil courts do.
That being said, there is no reason not to follow t he approach adopted by civil
courts, which requires that exceptions be based on the facts set out in the
complainant’s case, which if true would not make ou t a case in law and
secondly that the onus is on the excipient to make out its case. 4
Background
[10] In 2009, the Commission received a complaint f rom Berkina Twintig (Pty) Ltd
a newspaper publisher, which alleged that its newsp aper, Gold-Net News
(“GNN”), had been forced to exit the market in the Gold Fields area through
the predatory actions of its competitor Media24, wh ich operated the Forum
and Vista titles in the area. 5 It is common cause that GNN exited the market
in 2009 and Forum exited the market early the follo wing year. Whilst the
exits are common cause, the reasons for them are not.
3 See Loungefoam (Pty) Ltd and others v Competition Commi ssion and others; In Re: Feltex Holdings
(Pty) Ltd v Competition Commission and others [2011] 1 CPLR 19 (CAC) at par [16].
4 Marney v Watson 1978 (4) SA (C) at 144, McKelvey v Cowan N.O. 1980 (4) SA 525 (Z) at 526 and
South African National Parks v Ras 2002 (2) SA 537 (C) at 542.
5 See Commission Application ibid, paragraph 7.
4
[11] The Commission’s case, as set out in the compl aint referral, is that the
reason GNN exited the market is that it succumbed t o a predatory pricing
strategy embarked upon by Media24 using Forum as a “fighting brand”
which lowered its advertising rates to a predatory level to force its competitor
out of the market and having done so, it closed dow n Forum and continued
to operate through the more profitable Vista. 6 The Commission alleges that
Media24, the proprietor of both titles, has contrav ened section 8(d)(iv)
alternatively section 8(c) of the Competition Act 8 9 of 1998, as amended
(“Act”). The Commission’s supplementary affidavit seeks to add a new
element to the section 8(c) case and to explain its approach to costs in
respect of the section 8(d)(iv) case.
[12] Section 8(d)(iv) states that a dominant firm m ay not charge prices that are
below its marginal or average variable costs. Thes e two terms are not
defined in the Act but they have an orthodox meanin g in economics which
we explain later.
[13] Section 8(c) is the general exclusionary secti on. It differs from the sub-
paragraphs contained in section 8(d) as it does not refer to specific acts of
abuse, but rather refers to acts in general terms t hat have an exclusionary
effect. The sub-sections further differ both in te rms of their consequences
for the onus of proof and remedies. 7
[14] For the purpose of deciding the exception, we discuss the case made out
under these two sub-sections of the Act separately; first setting out the case
made out in the complaint referral and then the cas e as sought to be
amended by the supplementary affidavit.
6 Media24, whilst acknowledging the closures took pl ace, disputes the Commission’s theory of why
they closed.
7 For a more detailed discussion of the comparison s ee our decisions in The Competition Commission
v South African Airways (Pty) Ltd [2005] 2 CPLR 303 (CT) and Competition Commission of South
v South African Airways (Pty) Ltd [2005] 2 CPLR 303 (CT) and Competition Commission of South
Africa v Senwes Ltd [2009] 1 CPLR 18 (CT).
5
The case under section 8(c)
[15] The objections are that the Commission’s case discloses no cause of action
alternatively that it is vague and embarrassing.
[16] The most significant changes the supplementary affidavit brings about are to
this leg of the Commission’s case. In the complain t referral, the 8(c) case
relates solely to the actions of Forum, the alleged “fighting brand”. The case
made out there is straight forward - to the extent that the Commission did not
meet the more demanding cost threshold set out in s ection 8(d)((iv) (i.e.
below average variable cost (“AVC”), it relies on t he general exclusionary
terms of section 8(c) to allege that Forum priced a t a less demanding
threshold, but one that was nevertheless still excl usionary. This approach is
perfectly acceptable and has not attracted criticis m from Media24. Indeed in
a previous decision in Nationwide, in discussing the difference between
sections 8(c) and 8(d) in a predatory pricing case we held that:
8
“The burden on the complainant in a complaint of pr edatory behaviour
is higher under this section [8(c)] therefore than under 8(d)(iv). On the
other hand the complainant is not bound to follow t he prescribed cost
formula suggested in 8(d)(iv). In other words if a complainant, relying
on section 8(c), can show that a respondents costs are below some
other appropriate measure of cost not mentioned in the section it may
prevail provided that it adduces evidence of predat ion beyond mere
evidence of costs.”
(i) No cause of action objection
[17] In the Commission’s referral, it places no rel iance on actions by Vista. In the
supplementary affidavit, the further particulars im plicate Vista and refocus
the Commission’s case in respect of Forum.
8 Nationwide Airlines (Pty) Ltd and others v SAA (Pty ) Ltd and others [1999–2000] CPLR 230 (CT) at
page 10.
6
[18] In respect of Vista, the Commission alleges that it targeted certain customers
of GNN, inter alia , by offering them special rates. The Commission s tates
that it does not allege that these rates constitute d a self-standing prohibited
practice under the Act, but alleges that they serve d to make GNN more
susceptible to the exclusionary strategy being affected through Forum. 9
[19] The ways in which this pricing strategy was af fected included: reduced
advertising rates in Forum and to the “extent necessary in Vista” ; bundled
offers in terms of which advertisers were offered a discounted rate in both
Vista and Forum, free advertorials, teasers, non st andard size
advertisements and advertisements in other Media24 publications. 10
[20] The Commission states that in respect of Forum , its pricing is below AVC or
below total cost; however, it makes no claim that V ista priced its targeted
advertising below some measure of costs. Indeed it states the opposite –
that it does not rely on the Vista pricing as a sel f-standing prohibited
practice. 11
[21] Media24 has seized upon this remark and allege s that the further conduct is
excipiable on this basis alone. Media24 argues tha t if the conduct is not
unlawful, i.e. below some legally unacceptable meas ure of pricing, it cannot
be relied on to make a case, even if that case is m ade under the less
demanding standard of section 8(c). Put simply, it argues, lawful actions
cannot be used to buttress a case about supposedly unlawful actions.
[22] This argument is not supported by current case law in the European Union
where the European Commission and the courts have i n some cases found
predation, but the emphasis in the decisions has fo cussed more on the price
cutting than some notion of a lawful cost threshold such as marginal cost or
9 See paragraph 16 of the supplementary affidavit.
9 See paragraph 16 of the supplementary affidavit.
10 Paragraph 17 of the supplementary affidavit. ‘Teas er’ is a technical term in the industry for a note or
graphic on the front page or in another inconspicuo us part of the newspaper directing readers to a
particular advertisement.
11 Paragraph 16 ibid.
7
AVC.12 Commentators have inferred that these cases repr esent decisions
in which pricing above an economically relevant mea sure of cost has been
found to be predatory and have criticised them for this, saying pricing above
average total cost (“ATC”) should be presumptively lawful.13
[23] O’Donoghue and Padilla avoid being categorical but state in cautionary
terms:
“Condemning above-cost price cutting should be appr oached with
considerable reserve, since price competition is al most always desirable and
it is very difficult, if not impossible, to formula te a legal rule to distinguish
between an above-cost price that will eliminate a c ompetitor and one which
will not.”
14
[24] The Tribunal has adopted a similar approach in the past to not condemning
firms for mere price cutting. In FFS Refiners we stated:
“... it is not an offence under the Act merely to u ndercut one’s competitor, no
matter how stark the discrepancy in prices. Price c ompetition is after all the
essence of healthy competition. “
15
However that case did not decide the issue of whether there should be some
legal standard above which pricing could be lawful or presumed to be lawful.
[25] Media 24 urge us to decide this matter by foll owing the approach not of the
European courts but rather their critics. However, even if we were to follow
the approach of the critics, a matter we do not nee d to decide now, Media
24’s argument can only succeed if one views the pri cing actions of Vista in
12 Case C-62/86, AKZO Chemie BV v Commission [1991] ECR I-3359, Eurofix-Bauco v Hilti OJ 1988
L 65/19 and Case C-395/96P, Compagnie Maritime Belge Transports SA, Compagnie maritime belge
SA and Dafra-Lines A/S v Commission [2000] ECR I-1365.
13 See O’Donoghue, R. and Padilla, J. (2006) The Law and Economics of Article 82 EC. Oxford: Hart
Publishing at page 277. “A number of leading antitrust commentators...argue that all pricing above the
relevant measure of cost should be presumed lawful .”
14 See O’Donoghue and Padilla op cit page 280.
15 FFS Refiners (Pty) Ltd v Eskom and others [2003] 1 CPLR 180 (CT) at paragraph 19.
8
isolation of those of Forum. But in an exception c ase, as we noted earlier,
the excipient has to accept the correctness of the facts of the case as it is
pleaded. In this case the Commission has not pleade d the pricing actions of
Forum and Vista as separate activities. To the con trary, its case is that they
are linked. This is why the examples referred to b y Media24 in the
commentaries on the European case law are not in po int. They deal with
predatory actions by one firm, where pricing has be en aggressive but not
below ATC. They do not deal with a case on the cur rent pleaded facts,
where the dominant firm (Media24) is alleged to mak e use of two vehicles
(i.e. Forum and Vista) for its exclusionary strateg y, where the one vehicle
(i.e. Forum) is still alleged to be pricing below s ome unjustifiable threshold of
cost, albeit that the other being used in the strat agem (i.e. Vista), may be
pricing above that threshold.
[26] This distinction cannot be ignored. Forum’s b elow cost pricing remains
fundamental to the Commission’s 8(c) case. Indeed, in the further
particulars, Forum is described as the ‘primary vehicle’ used to effect
Media24’s exclusionary strategy.
16 The Commission is contending that the
use of below cost pricing by Forum, ‘ buttressed’ by the pricing conduct of
Vista is exclusionary. What the Commission is alle ging is that Media24 is
utilising both these vehicles as part of its exclusionary strategy. The conduct
of Vista is not to be taken in isolation; Vista is being used to target certain
advertisers whose custom GNN seeks to rely on. In argument the
Commission’s counsel described this as a strategy o f exclusion premised on
two pincers. The two titles represent each pincer. Vista was used to target
what the Commission describes as local customers of GNN in order to
induce them not to advertise with the latter. 17 The essence of the
Commission’s case is the alleged concertation betwe en the two titles in
Commission’s case is the alleged concertation betwe en the two titles in
affecting an exclusionary strategy.
[27] We do not have to decide now whether this theory of harm under section 8(c)
will ultimately prevail. We only have to decide, f or purposes of determining
16 Paragraph 14 ibid.
17 Paragraph 15 ibid.
9
the exception, whether it can never prevail. Expre ssed differently, could
such an allegation never sustain a cause of action under section 8(c) so that
it falls to be dismissed at this stage without the need to go to trial.
[28] The fact that actions by a dominant firm on th eir own may be lawful does not
immunise them from prosecution as an abuse when don e in concert with
other actions. After all abuses are forms of condu ct that are otherwise
lawful; they become susceptible to legal attack bec ause they are performed
by a dominant firm. In the same way acts taken in i solation by a dominant
firm may be lawful, but taken cumulatively with oth er actions by the same
dominant firm they may, viewed from this vantage po int, be considered as
pieces of a larger unlawful exclusionary act.
[29] As Areeda and Hovenkamp have explained in thei r treatise when dealing
with monopolisation:
“Any one exclusionary act may seem trivial. Indeed, we shall often be unable
to find that several such acts, taken together, pro bably “caused” or
contributed significantly to the defendant’s power. Yet such acts can
determine the often marginal choice of an actual or potential rival deciding
whether to expand or enter a market.”
18
[30] Both case law of the European Union and commen tators who write about it,
support this approach of not looking at acts in isolation. In Post Danmark, the
European Court of Justice, whilst holding that discounting by a dominant firm
that led to pricing that was still above average in cremental cost was not
unlawful, still cautioned the need to consider all circumstances:
“In order to determine whether a dominant undertaki ng has abused its
dominant position by its pricing practices, it is n ecessary to consider all the
circumstances and to examine whether those practices tend to rem ove or
restrict the buyer’s freedom as regards choice of s ources of supply, to bar
18 Areeda, P. and Hovenkamp, H. (2001) Antitrust law. New York: Aspen Publishers at paragraph
651c.
10
competitors from access to the market, to apply dis similar conditions to
equivalent transactions with other trading parties, thereby placing them at a
competitive disadvantage, or to strengthen the domi nant position by
distorting competition (see, to that effect, Deutsc he Telekom v Commission,
paragraph 175 and case-law cited).” 19 (Our emphasis)
[31] This sentiment is expressed in even stronger t erms by O’Donoghue and
Padilla who wrote prior to the Post Danmark decision. They discuss certain
cases where exclusionary conduct has been found des pite pricing above
ATC:
“The most convincing explanation is that pricing ab ove ATC is only unlawful
when it is coupled with a range of other exclusiona ry practices i.e there is
cumulative evidence of abuse as part of a plan to eliminate a rival. The
pricing is not unlawful in itself but can be viewed as unlawful where it is
linked with other exclusionary practices. The prici ng is a key part of an
overall exclusionary strategy and there is no other explanation for it.”
20
[32] They go on to say:
“Finally, in the context of loyalty rebates, the Co urt of First Instance has
confirmed that it is appropriate to have regard to the cumulative effect of a
series of practices with similar objectives when as sessing their legality.
While this does not absolve a plaintiff or competit ion authority from proving
that certain abuses did occur, it may allow a practice that would otherwise be
lawful to be regarded as unlawful in circumstances where it is a part of an
overall strategy of abusive behaviour.”
21
[33] Similarly in commenting in his opinion on Compagnie Maritime Belge v the
Commission , the Advocate General, in a much cited passage, st ated that
19 Case C-209/10 Post Danmark A/S v Konkurrencerådet, judgment of 27 March 2012: paragraph 26.
20 See O’Donoghue and Padilla op cit page 281.
21 Supra page 282.
11
whilst price competition was the essence of free an d open competition there
were nevertheless circumstances when price cutting may be of concern:
“Different considerations may, however, apply where an undertaking which
enjoys a position of dominance approaching a monopo ly, particularly on a
market where price cuts can be implemented with rel ative autonomy from
costs, implements a policy of selective price cutti ng with the demonstrable
aim of eliminating all competition by pursuing a se lective pricing policy which
in the long run would permit it to increase prices and deter potential future
entrants for fear of receiving the same targeted treatment.”
22
[34] At the risk of repetition we do not need to de cide whether these approaches
should be followed in our law. What they illustrate is that an argument that
the Commission’s approach finds no support in other case law or
commentary is without foundation. Whether a partic ular set of actions of a
dominant firm are exclusionary is a fact specific i ssue that must be decided
at trial. It is not an issue that can be determined categorically at exception
stage; factors such as the relationship between the actions, (in this case this
means those of Vista and Forum and the approach tha t Media24 took to
them which on the Commission’s case suggests a join t approach), the
nature and characteristics of the particular indust ry, the period of the alleged
predation and the justification for the actions, al l matter in the final
determination. These facts must first be established before assumptions can
be made as to whether behaviour adopted by a respon dent firm in the final
analysis is more consistent with a stratagem to exclude a rival or a legitimate
business response to a competitive challenge.
[35] As long as the case pleaded by the Commission may establish such a case,
it must survive the test for exception. We find that it does.
[36] We thus find that Media24 has failed to establ ish that the Commission’s
[36] We thus find that Media24 has failed to establ ish that the Commission’s
supplementary affidavit discloses no cause of action under section 8(c).
22 Whish, R. and Bailey, D. (2012) Competition Law. New York: Oxford University Press at page 751.
12
(ii) Vague and embarrassing objection
[37] Where we have some sympathy for Media24 is the objection of vague and
embarrassing as it concerns the allegations pertain ing to Vista. Media24 is
entitled to be provided with further particulars of the pricing strategy alleged
to have been used by Vista in order to be able to appreciate the nature of the
case against them. The manner, duration, and time period in which the
targeting of certain customers of GNN is alleged to have taken place should
be specified, given that the complaint period relat es to a five year period and
may implicate many events, which Media24 cannot be expected to divine
without assistance. If the Commission has received this information from its
recent consultations and/or discovery of documents it should be able to
provide them. For this reason further particulars have been ordered. The
Commission must either provide this particularity o r if it cannot, not persist
with this allegation.
[38] The details of the particulars it should provi de are set out in the attached
order and are self-explanatory.
The 8(d)(iv) complaint
[39] Unlike the 8(c) complaint, the 8(d)(iv) compla int is confined to the actions of
Forum. The case made out in the complaint referral is that Forum was used
as a fighting brand against GNN. To that end its p ricing was during the
relevant period of the complaint either below AVC w here the variability of
costs are based on the whole period or on an altern ative approach, below
AVC where the variability of costs are based on a o ne year period. To that
case Media24 has been able to plead and it did so.
[40] During the discovery applications Media24 sugg ested that it did not
understand the Commission’s approach to the methodology it would adopt in
its predation case. In response the Commission dec ided to explain its
approach further. It is to this explanation that Media24 excepts.
13
[41] In the further particulars, in one paragraph, the Commission, under a
heading ‘Clarification of cost measures’, states the following:
“In those circumstances, the Commission submits tha t it is relevant from an
economic perspective to compare the incremental cos ts of operating Forum
(being the costs that are “variable” or “marginal” to the decision to operate
Forum) and the associated incremental revenues obta ined by Media24 from
operating Forum for purposes of:
25.1 the Commission’s complaint against Media24 und er section
8(d)(iv) of the Act; and
25.2 the below-cost pricing aspect of the Commissio n’s complaint
against Media24 under section 8(c) of the Act.”
23
[42] Media24 has interpreted this paragraph as sugg esting that instead of opting
for one of the cost based models set out in section 8(d)(iv) (i.e. below
marginal cost or AVC), the Commission is attempting to rely on the notion of
incremental costs. The Commission in response has a rgued that it has not
abandoned the AVC test. Rather, it wished to signal to Media24 that it was
using all the costs of Forum, the so-called fightin g brand, as incremental
costs, so Media24 could understand the Commission’s approach, but that in
this case, the incremental and AVC approach would l ead to a congruent
result. Media24 does not accept this clarification. Incremental costs
Media24 argues, by definition include fixed costs, unlike AVC which do not,
and hence it argues the Commission is relying on a standard that is not
cognisable under the test in section 8(d)(iv).
[43] At this point, a departure to consider what is meant by certain of these terms
is warranted. Section 8(d)(iv) as we have noted re fers to two cost bases,
namely marginal cost and AVC.
23 See page 25 of Commission’s supplementary affidavit.
14
[44] Marginal cost is understood to refer to the ad ditional cost of producing an
additional unit of output.
[45] AVC is defined as total variable costs (i.e. t hose costs that would increase if
a firm chose to increase its output) divided by the total number of units
produced.
[46] ATC is the sum of all variable and fixed costs divided by total output. Its
significance is that only if pricing is above ATC w ill the firm make a profit
each year.
[47] Long-run average incremental cost (“LRAIC”) is the average of all the costs
that a company incurs to produce a particular produ ct assuming that its
starts afresh or the cost of the incremental output associated with the
exclusionary conduct. This cost includes both fixe d and variable costs and
sunk costs.
24
[48] Whilst these definitions might be reasonably u ncontroversial their application
is not. Fixed and variable costs may be fixed noti ons conceptually, but they
are variable in their application depending on the time period selected. As
the authors of a well known micro economic text book have explained:
“How do we know which costs are fixed and which are variable? The
answer depends on the time horizon that we are cons idering. Over a very
short time horizon – say, a few months – most costs are fixed. Over such a
short period, a firm is usually obligated to pay fo r contracted shipments of
materials and cannot easily lay off workers, no mat ter how much or how little
the firm produces.
On the other hand, over a longer time period – say, two or three years –
many costs become variable. Over this time horizon , if the firm wants to
24 The definitions have been obtained with reference to two sources: Neils, G., Jenkins, H. and
Kavanagh, J. (2011) Economics for Competition Lawyers . Hampshire: Oxford University Press at
pages 189-198 and also Bishop, S. and Walker, M. (2 010) The Economics of EC Competition Law:
pages 189-198 and also Bishop, S. and Walker, M. (2 010) The Economics of EC Competition Law:
Concepts, Application and Measurement . 3 rd edition. Sweet and Maxwell at pages 341-6.
15
reduce its output, it can reduce its workforce, pur chase fewer raw materials,
and perhaps even sell off some of its machinery. Ov er a very long time
horizon – say, ten years – nearly all costs are var iable. Workers and
managers can be laid off (or employment can be redu ced by attrition), and
much of the machinery can be sold off or not replac ed as it becomes
obsolete and is scrapped.” 25
[49] Since the Commission’s case as pleaded still r elies on AVC, it has met the
standard required by the section and cannot, on thi s basis, be excipiable.
The allegation that these costs will be congruent t o incremental cost is a
question of fact and expert evidence and cannot be elevated to a proposition
of law so that it falls to be determined as being wrong at exception stage.
[50] We thus find that the exception that the Commi ssion’s supplementary
affidavit makes out no cause of action in respect of section 8(d)(iv) fails.
The 8(d)(iv and 8(c) complaints are contradictory
[51] Finally, we consider an argument by Media24 th at the complaints under
section 8(c) and section 8(d)(iv) are contradictory . The argument is that a
predation case is either good under section 8(d)(iv ), because it meets the
threshold requirements of that sub-section, and if it is not, and is still related
to predation, then it can only be made under sectio n 8(c). The same set of
facts cannot exist under both sections. Media24 ar gues that the case based
on incremental costs is precisely this; one that se eks to exist on the
foundations of the same allegations under both sect ions. However, this
again is a mischaracterisation of the Commission’s case. Under section
8(d)(iv), the Commission’s case is that the Forum p ricing is below AVC and
therefore a contravention. It will contend that in that situation incremental
costs are the same as AVC. Its case under section 8(c) is properly pleaded
as an alternative case. For instance after hearing the matter the Tribunal
as an alternative case. For instance after hearing the matter the Tribunal
25 Pindyck, R. and Rubinfeld, D. (2009) Microeconomics . 7 th edition. New Jersey: Pearson Education
at pages 224-5.
16
might find that Forum’s costs were above AVC, but s till below its incremental
cost. This might happen for instance if the Tribuna l found that some of
Forum’s costs were fixed, rather than variable. In such a situation AVC
would not be ‘congruent’ with AVC, which is its 8(d )(iv) case, but the
Commission would still want to argue that the below incremental cost pricing
was nevertheless exclusionary, for the purposes of a contravention of
section 8(c). Thus there is no contradiction, but a legitimately pleaded
alternative case.
CONCLUSION
[52] The objection that the Commission’s supplement ary affidavit fails to disclose
a cause of action is dismissed. The objection base d on vague and
embarrassing is partly upheld in relation to the al legations concerning Vista
and further particulars in this regard have been or dered. The objection that
the Commission’s two counts under section 8(c) and section 8(d)(iv) are
contradictory is also dismissed.
17
ORDER
[53] The Commission is granted leave to file its su pplementary founding affidavit,
dated 26 February 2013, in support of its complaint referral in this matter,
subject to the following:
53.1 The Commission must within 20 business days o f this order supply
further particulars in relation to the allegations in terms of section 8(c)
insofar as they concern Vista as follows:
In relation to the allegations of Vista’s targeting of certain customers of
GNN:
53.1.1 The time period in which the targeting alleg ed to have taken
place and for how long was it alleged to have operated.
53.1.2 The customers (i.e. advertisers) who were ta rgeted,
alternatively the type of advertisers by reference to class of
business or area of operation.
53.1.3 The nature and extent of the discounting. M ore particularly,
how did it compare with the pricing offered to non- targeted
customers of Vista and, if appropriate, Forum?
53.1.4 Is it alleged that Vista and Forum co-ordina ted their approach
to discounting? If so, provide succinctly the fact s on which
the Commission will rely for this proposition.
53.1.5 What facts does the Commission rely on to st ate that
Media24’s strategy was exclusionary as opposed to a normal
business response to competition in the relevant market?
18
[54] Media24 is given leave to file a supplementary answering affidavit provided it
does so within 20 business days of the filing of th e Commission’s further
particulars contemplated in paragraph 53.1 above.
________________ 28 March 2013
NORMAN MANOIM DATE
Yasmin Carrim and Andreas Wessels concurring
Tribunal Researcher: Nicola Ilgner
Tribunal In-House Economist: Andrew Sylvester
For the Commission: Adv. J Wilson and Adv. G Marri ott, as instructed by
Gildenhuys Malatji Attorneys
For Media24 (Pty) Ltd: D Unterhalter SC and Adv. M Norton, as instructed
by Werksmans Attorneys