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Competition Commission v Media 24 Proprietary Limited (CR154Oct11/REM144Sep15) [2016] ZACT 86; [2016] 2 CPLR 968 (CT) (6 September 2016)

78 Reportability
Competition Law
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Brief Summary

Competition Law — Remedies — Appropriate remedies following contravention of Competition Act — Media24 found to have engaged in predatory pricing to eliminate rival publication GNN — Competition Tribunal required to determine suitable remedies after finding of contravention — Commission sought interdict and investment remedy, while Media24 proposed goodwill gesture remedy — Tribunal held that evidential burden on Media24 to demonstrate restoration of competition in market since merits decision — Tribunal to consider whether competition has been restored before deciding on remedies.

Comprehensive Summary

Summary of Judgment


1. Introduction


This judgment concerns a remedies determination by the Competition Tribunal of South Africa following a prior finding on the merits that Media 24 Proprietary Limited (Media24) contravened section 8(c) of the Competition Act 89 of 1998. The proceedings were initiated by the Competition Commission (the Commission) as applicant, with Media24 as respondent.


The Tribunal had already issued a merits ruling on 8 September 2015 (referred to in this reasons document as the “Merits Decision”) finding that Media24 engaged in predatory pricing through a “fighting brand” strategy in the Goldfields community newspaper advertising market. The Merits Decision did not determine an appropriate remedy because the parties requested that the Tribunal first decide liability and only thereafter determine remedy.


A separate remedies hearing was accordingly held on 4, 7, and 8 April 2016, with reasons on remedy issued on 6 September 2016. The dispute in this remedies phase concerned what non-penalty relief could competently and appropriately be ordered to address the enduring effects of the prohibited practice, given that (on common cause) an administrative penalty was not competent for a first-time contravention of section 8(c).


The general subject-matter of the dispute is the restoration of effective competition in the market for advertising in community newspapers in the Goldfields area, following exclusionary conduct found to have caused a rival’s exit and enabled Media24’s remaining title to regain monopoly conditions.


2. Material Facts


The Tribunal’s starting point in the remedies enquiry was the factual foundation established in the Merits Decision. In that decision, the Tribunal found that Media24 used one of its titles, Forum, as a fighting brand to engage in predatory pricing, with the effect of driving a rival, Gold Net News (GNN), out of the market. Once GNN exited, Media24’s other title, Vista, re-established a dominant position, and Media24 later closed Forum (approximately ten months after GNN’s exit). The Tribunal had previously found that post-exit, Vista was able to increase advertising rates and capture the entire market, reflecting supra-competitive pricing and substantial and enduring anticompetitive effects.


In the remedies hearing, a central factual dispute was whether competition had since been restored to the Goldfields market, given that the market evidence underlying the Merits Decision primarily related to conditions around 2009, whereas the remedies hearing occurred in 2016. The Commission contended that the monopoly conditions persisted; Media24 contended that new entry and other publications meant competition had returned, making restorative measures unnecessary.


On the evidence presented at the remedies hearing, Media24 did not call factual witnesses from within its operations to attest to market conditions, despite the Tribunal’s view that Media24 would have been well-placed to produce such evidence (including internal reporting on competitive conditions). Instead, Media24 relied principally on an economist report (Genesis), based on desk research (including library and publicly available information) about other publications’ print orders, advertising rates, pagination, footprints, languages, and publishers, and an “advertising overlap” comparison aimed at indicating competitive constraint on Vista.


The Tribunal considered the publications identified by Genesis, including relatively recent entrants such as The Article (entered January 2016) and Kasi, and an earlier entrant Dumelang News (entered 2012). The Tribunal found, on the characteristics and overlap measures described, that these publications did not appear to exert significant competitive pressure on Vista, whether due to small scale, content, language, geography, frequency, or limited advertiser overlap.


The Commission led witness statements and viva voce evidence from individuals associated with The Media News, which Media24 itself had described as a significant new entrant. The founder, Mr Enrico Pantene, provided a witness statement but did not testify viva voce despite being subpoenaed; however, both parties sought to rely on parts of his statement. Evidence from Pantene’s statement and from two advertising sales witnesses (Ms Anneline Kruger and Ms Lorette Douglas) painted The Media News as struggling and declining, with reduced print orders, heavy discounting, reduced pagination, cash-flow difficulties, printing delays, and distribution problems. The Tribunal accepted that advertiser confidence depended materially on a publication’s perceived sustainability and reliability of printing and distribution.


The Tribunal also received evidence about structural barriers to entry in community newspapers, particularly the cash-flow “squeeze” associated with paying printing and distribution costs up-front while advertiser payments were delayed, and the reputational harm caused by unreliable distribution. The Tribunal noted that Media24, through entities in the Naspers group, had access to printing capacity (including through Paarl Coldset Proprietary Limited) and distribution services (through On The Dot), which were relevant to designing a restorative remedy.


3. Legal Issues


The central legal questions the Tribunal was required to determine were, first, whether—despite the Merits Decision’s findings—market circumstances had changed such that competition in the Goldfields market had been restored, thereby rendering a restorative remedy unnecessary or inappropriate. This involved a factual enquiry about post-contravention market conditions, combined with a legal/procedural question regarding who bore the evidential burden where remedies were determined significantly later than merits.


Second, given that an administrative penalty was not competent for a first-time contravention of section 8(c), the Tribunal had to determine what other remedies were competent and appropriate to address enduring anticompetitive effects. This required an evaluative assessment of remedy design and proportionality, particularly whether the Commission’s proposed interdict and investment/subsidy remedy were justified, effective, and sufficiently connected to the contravention, and whether an alternative credit guarantee remedy could better address barriers to entry and restore competitive conditions.


The dispute therefore concerned a mixture of fact (current competitive conditions), application of legal principles to fact (remedial appropriateness and nexus to harm), and a value judgment in selecting an effective and proportionate remedy consistent with the Act’s remedial objectives.


4. Court’s Reasoning


The Tribunal first addressed the procedural and evidential position created by the separation of the merits and remedies phases. It accepted the Commission’s contention that, once the Tribunal had made factual findings on the merits that the prohibited practice lessened competition, those findings did not need to be re-proved merely because remedies were heard later. However, the Tribunal also held that where a substantial period has elapsed, it has a discretion to hear evidence of changed market circumstances. In exercising that discretion, and given that approximately seven years had elapsed since the market circumstances underlying the Merits Decision, the Tribunal decided to consider whether competition had been restored.


On the question of evidential burden regarding changed circumstances, the Tribunal held that Media24 bore the evidential burden to show that competition had since been restored. It reasoned that this did not unfairly shift the overall onus, because Media24 was best placed to produce relevant evidence of the market’s current competitive dynamics, including evidence internal to its business operations.


Turning to the evidence, the Tribunal drew an adverse inference from Media24’s decision not to call factual witnesses, particularly because it was common cause in the merits proceedings that Media24 had detailed reporting on publication performance and competitive conditions. The Tribunal contrasted this absence of internal evidence with the desk-research nature of the Genesis report. While accepting the survey data as uncontested, the Tribunal was not persuaded that the publications identified constituted effective competitive constraints on Vista, given differences in scale and product characteristics and low advertiser overlap.


The Tribunal treated The Media News as the most relevant potential indicator of renewed competitive rivalry. Evaluating the Commission’s evidence (including uncontested or corroborated parts of Pantene’s statement and the viva voce evidence of Kruger and Douglas), the Tribunal found that The Media News showed signs of being a troubled entrant rather than evidence that competition had been restored. It accepted that sustainability problems, declining print orders, discounting, reduced pagination, and distribution and printing constraints undermined The Media News’s ability to discipline Vista’s market power. The Tribunal therefore concluded that Media24 had failed to establish that competition was restored, and that the anticompetitive conditions identified in the Merits Decision remained substantially in place.


Having found that a restorative remedy was justified, the Tribunal assessed the competing remedy proposals.


On the Commission’s proposed interdict, the Tribunal rejected it on both evidential and remedial-design grounds. It was not persuaded that the Commission had established recidivism through the alleged later introduction of a further publication (Goldfields Express), particularly because the uncontested timeline suggested Goldfields Express entered before The Media News, undermining the thesis that it was introduced as a fighting brand to eliminate that entrant. More fundamentally, the Tribunal considered the interdict, as framed, to be overbroad because it would prohibit Media24 from publishing more than one community newspaper in the relevant languages and area for six years, thereby restricting both unlawful and lawful conduct. The Tribunal regarded this as potentially supply-limiting and capable of harming consumers by reducing choice without a demonstrated restorative benefit. It also reasoned that a narrower interdict focused on “fighting brands” would in practice require proof akin to a fresh prohibited practice case. The Tribunal considered that the declaratory order, combined with the increased exposure to an administrative penalty for a repeat contravention, constituted a sufficient deterrent against repetition.


On the Commission’s proposed investment remedy (a R10 million fund administered by the Media Diversity Development Agency to support a new entrant), the Tribunal did not reject the underlying rationale of restoring competition. Instead, it rejected the remedy primarily on the basis of effectiveness and certainty. It held that the proposal carried a high risk that the selected recipient might not compete effectively against Vista, might differentiate away from direct competition, or might consume the subsidy and exit, and that the draft terms did not adequately ensure competitive impact in the relevant market. The Tribunal regarded the remedy as “hit and miss” and thus inappropriate on a cost-benefit view. Because it rejected the remedy for lack of likely effectiveness, it found it unnecessary to decide the other objections, including whether the subsidy was in substance a disguised penalty.


The Tribunal preferred a credit guarantee remedy aimed at lowering barriers to entry by addressing the cash-flow and reliability constraints associated with printing and distribution. It identified printing and distribution as major cost components and, crucially, as factors affecting credibility with advertisers. It reasoned that providing 90-day credit terms for printing and distribution services offered by entities associated with Media24 (Paarl Coldset and On The Dot) could materially alleviate the up-front payment barrier that undermined entrants, and could increase the likelihood of sustained entry by enabling entrants to collect advertising revenue before settling printing and distribution invoices.


While the remedy was initially proposed by Media24 in a narrower form (limited to two selected publications), the Tribunal modified it to avoid uncertainty about who would select beneficiaries and to avoid limiting benefits to only two recipients. It instead designed a remedy where eligibility would be determined by objective criteria (including content, language, frequency, format, maximum pages, and print order) and where the market would determine which publications would take up the offer. It considered that, although success was not guaranteed, the remedy increased the probability of meaningful rivalry more than the investment fund or the interdict, while avoiding the distortive character of a subsidy. The Tribunal also added mechanisms to ensure the remedy’s practical availability, including requirements to publicise the order and provide compliance proof to the Commission.


Finally, the Tribunal dealt with the period covered by the declaratory order. Although the Merits Decision had found the contravention period extended to April 2009, the parties had agreed (and did not dispute during the remedies hearing) a declaratory period ending in February 2009 as in the Commission’s referral. The Tribunal accepted the agreed end date for purposes of the declaration, noting that little turned on the discrepancy in the absence of a competent administrative penalty.


5. Outcome and Relief


The Tribunal granted a declaratory order declaring that Media24’s pricing conduct in the Goldfields market for advertising in community newspapers during January 2004 to February 2009 contravened section 8(c) of the Competition Act 89 of 1998.


The Tribunal refused to grant the Commission’s proposed interdict remedy and refused to grant the Commission’s proposed investment remedy requiring Media24 to fund a new entrant via the MDDA.


The Tribunal granted a credit terms (“Credit Order”) remedy requiring Media24 to ensure that, within one month, qualifying current participants and potential new entrants in the Goldfields market are entitled to 90-day credit terms with Paarl Coldset Proprietary Limited (printing) and On The Dot (distribution), subject to detailed conditions in Annexure A. The offer is open for acceptance for 25 months from the order date, and once first used by a beneficiary, the credit terms apply for 36 months, subject to termination on default or market exit. The credit applies at prices consistent with ordinary commercial pricing, with pro-rata application where page numbers or print orders exceed stated maxima.


The Tribunal further ordered Media24 to publish notices of the order and an explanation of the credit terms in two newspapers (one in English/Afrikaans and one in Sesotho) circulating in the Goldfields area, within at least fifteen days of the order and again on the first anniversary, to deliver copies of the notice to existing publications in the area, and to provide the Commission with proof of compliance within three months of the order and within three months of the first anniversary.


No order as to costs is recorded in the text of the reasons or the order.


Cases Cited


The Competition Commission of South Africa and Media 24 Limited, Competition Tribunal Case No. 013938/CR1540ct11.


The Competition Commission and Media 24 (Pty) Limited, Competition Tribunal Case No. 016824.


Legislation Cited


Competition Act 89 of 1998, section 8(c).


Competition Act 89 of 1998, section 8(d)(iv).


Competition Act 89 of 1998, section 55(3).


Competition Act 89 of 1998, section 59(1)(b).


Rules of Court Cited


No rules of court are cited in the judgment.


Held


The Tribunal held that, given the lapse of time between the merits and remedies phases, it was appropriate to consider whether market circumstances had changed, but that Media24 bore the evidential burden to show that competition had been restored. Media24 failed to discharge that burden, and the Tribunal found that market conditions had not materially changed from those underpinning the Merits Decision; effective competition had not been restored and Vista’s dominance remained substantially unchallenged.


The Tribunal held that an interdict preventing Media24 from publishing more than one community newspaper in the relevant area and languages for six years was not appropriate because it was overbroad, potentially supply-limiting, and not justified on the evidence of recidivism. It further held that the proposed investment remedy (a fund administered by the MDDA) was unlikely to be effective because it provided insufficient certainty that the funded entrant would compete effectively or sustainably in the relevant market.


The Tribunal held that a credit guarantee/credit terms remedy directed at lowering entry barriers—by providing 90-day credit for printing and distribution through Media24-associated service providers—was an appropriate restorative remedy, provided it was made broadly and transparently available to qualifying publications and publicised to the market.


LEGAL PRINCIPLES


A first-time contravention of section 8(c) does not permit an administrative penalty under section 59(1)(b) unless the conduct is substantially a repeat contravention; however, this does not preclude the Tribunal from granting other competent remedies, including declaratory and restorative relief.


Where merits and remedies are separated in time, the Tribunal may exercise discretion to consider evidence of changed circumstances. Where a respondent contends that market conditions have improved such that restorative relief is unnecessary, the respondent may bear an evidential burden to show that competition has been restored, particularly where the respondent is best placed to adduce such evidence.


Remedies should be assessed for appropriateness and effectiveness in restoring competition. A remedy that is overbroad, restricts lawful competitive conduct, or risks being supply-limiting may be refused where it is not sufficiently tailored to the unlawful conduct’s effects and does not demonstrate a clear restorative benefit.


A restorative remedy aimed at reducing barriers to entry may be preferred where it is more likely to produce competitive rivalry through market mechanisms and where it avoids the uncertainty associated with selecting subsidised “winners” via third-party discretion.

-- -- -----1 - -- ---------1
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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: CR1540ct11/REM144Sep15
In the matter between:
THE COMPETITION COMMISSION Applicant
and
MEDIA 24 PROPRIETARY LIMITED
Panel
Heard on
Reasons Issued on
: Norman Manoim (Presiding Member)
: Yasmin Carrim (Tribunal Member)
: Merle Holden (Tribunal Member)
: 4 April, 7 April and 8 April 2016
: 6 September 2016
Reasons for Decision
Respondent
[ 1 ] On 8 September 2015 we found that Media 24 Proprietary Limited ("Media24")
had contravened section 8(c) of the Competition Act, Act 89 of 1998 ("the
Act"). Our reasons for doing so were set out in that decision which, to avoid
confusion, we will refer to as the "Merits Decision". 1
1 The Competition Commission of South Africa and Media 24 Limited CT case no: 013938/CR1540ct11.
1

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I '
[ 2] The essence of the Merits Decision was that Media24, had used one of its
titles, Forum, as a fighting brand, to engage in predatory pricing and thus drive
out a rival publication, Gold Net News ("GNN") from the market, which once
accomplished re-established the dominant position of its other title, Vista.
(Note Media24 closed down Forum some 10 months after GNN had exited the
market.)
[ 3 ] The Merits Decision did not deal with the issue of an appropriate remedy. This
is because both parties wished us to decide the merits first.
[ 4] However the Merits Decision disposed of one possible competent remedy,
because the finding was made in terms of section S(c) of the Act, and not S(d)
(iv). An administrative penalty cannot be imposed on a respondent for a first
time contravention of section S(c). Since it is common cause that Media24
has not previously contravened the Act, an administrative penalty is not
competent.2
[ 5 ] This does not mean that other remedies cannot be imposed and that is the
question that these reasons address.
Procedure Followed
[ 6] Prior to the oral hearing on remedies we requested both the Commission and
Media24 to make written submissions on an appropriate set of remedies. This
was to see if a consensus could be reached.
[ 7 ] Both agreed that a declaratory order was appropriate so we need not consider
this issue further. The declaration is set in paragraph 1.1 of our order.
[ 8 ] That was as far as the consensus went. Since there was a disagreement on a
range of issues we decided that a further hearing devoted to remedies would
be necessary.
2 Sees 59(1 ){b) of the Act. For a penalty to be imposed in terms of s B(c) the Act requires the conduct
to be" ... substantially a repeat by the same firm of conduct previously found by the Competition Tribunal
to be a prohibited practice."Under s B{d) however a penalty may be imposed for the first contravention.
2

-------- i ------ J
What were the differences in approach?
[ 9 ] The Commission in addition to the declaratory order seeks the imposition of
an interdict on Media24 from publishing a further title in the Goldfields area for
six years ("the Interdict Remedy") and requires it to sponsor the entry of a
new rival in the amount of R 10 million ("the Investment Remedy").
[ 10] Media24 rejects both the Interdict Remedy and the Investment Remedy as
proposals for remedies as we go on to discuss. In turn it offers what it terms a
"Goodwill Gesture Remedy" which involves funding entrepreneurial training
for would-be journalists in the amount of R 945 000.3 The Commission
considered this remedy inadequate.
[ 11 ] During the course of the remedies hearing we canvassed views of the parties
on another type of remedy. This remedy involved requiring other business
entities in the Naspers group, to which Media24 belongs, to provide credit for
printing and distribution services to rivals of Vista, on certain terms and
conditions. Its object was to lower barriers to entry in this market.
Our approach
[ 12] In order to decide on an appropriate remedy, we have to determine whether
competition has been restored to the market. This is the first dispute of fact
we have to determine and what we go on to consider in PART A of this
decision. If we find that competition has not been restored, then a restorative
remedy is appropriate. If a restorative remedy is appropriate the next question
is what form it should take? We consider this latter question in PART B of this
decision.
PART A:
HAS COMPETITION BEEN RESTORED TO THE MARKET?
[ 13] The first dispute of fact is whether competition has since been restored to the
Gold Fields market. In the Merits Decision we found that:
3 This amount, originating from the respondents remedies proposal dated 15 February 2016, comprises
a once-off cash injection of R40 000 and training of R17 500 per month for six months per publisher of
which there are nine publishers in total.

which there are nine publishers in total.
3

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"Post the complaint period Vista has been able to achieve higher rates
than it could previously during the complaint period and over a much
greater share of the market indeed the entire market. Advertising rates
have increased at rates higher than they were during the period of
competition. Compared with the rates at which tariffs had increased in
previous years, on the evidence of Ms Van Eck, these increases reflect
supra -competitive pricing. Given the fact that Media 24 acquired a
monopoly in the market post April 2009, this effect is hardly surprising
and is predictable. Since the monopoly still subsists at the time of the
conclusion of this matter the anti-competitive effects are substantial and
enduring. "4
[ 14] However the remedies hearing took place in April 2016. The market evidence
informing the merits finding, related to circumstances as they were in 2009 i.e.
seven years earlier. Media24 maintains that in this period the market has since
returned to competition, thus making a restorative remedy unnecessary,
something the Commission seeks to refute.
(i) Legal test: who bears the evidential burden?
[ 15] Ordinarily we would decide the merits and the remedy at the same time
following a single hearing. In this case, as noted, at the request of both parties,
the issue of remedies was left to a later hearing. The time between the end of
the hearing of evidence on the merits and the beginning of the hearing on
remedies was approximately 20 months.
[ 16] If we had heard both the merits and remedies at the same time once the
Commission had discharged the onus of proving anticompetitive effects in
respect of the merits, it is obvious that it would not have had to again repeat
this process for the purpose of proposing a remedy.
4 See Merits decision paragraph 612.
4

[ 17] Should the fact that there has been a time lag between the decision on the
merits and the hearing on remedies make any difference to the Commission's
position? The Commission argued that it should not. Once the Tribunal has
made its finding on the merits, absent evidence to the contrary led by Media24,
the findings of fact the Tribunal made in the Merits Decision, still apply.5
[ 18] For its part, Media24 has avoided tackling this issue head on, instead relying
on the argument that the Commission has an overall onus to prove its case.
[ 19] In our view the argument of the Commission on this point is correct. Once the
Tribunal has made a factual finding on the merits that the prohibited practice
has led to a lessening of competition in the market those factual issues do not
need to be reconsidered for the purpose of imposing a remedy. However if the
hearing on remedies and the merits do not take place at the same time, the
Tribunal has a discretion to hear evidence as to whether market
circumstances has since changed. Since seven years have elapsed since the
last evidence was heard on market circumstances we have decided to
consider whether market circumstances have changed. However Media24 as
the respondent bears the evidential burden to show that competition has since
been restored to the market place. This is not an unfair shifting of the burden
because the respondent in this case is best placed to lead this evidence.
(ii) The factual issues
[ 20 ] Given this finding we start off considering what evidence was presented by
Media24 to establish that competition had returned to the Goldfields market.
[ 21 ] In its written submission Media24 alleged that the market was characterised
by vibrant competition from a number of players the most significant of which
was a new entrant that had entered the market since our Merits Decision. This
entrant is a weekly publication known as The Media News.
[ 22] At the first pre-hearing to regulate the remedies process Media24 indicated

[ 22] At the first pre-hearing to regulate the remedies process Media24 indicated
that it was considering calling the owner of The Media News, Mr Enrico
5 See page 11 para 22 of the Commission's Submissions as to Remedy. See also its oral submissions,
transcript pages 113 and 276.
5

Pantene as its witness. The arrangement was that if after interviewing him
Media24 decided not to call him, they would inform the Commission, which
could then decide if it wanted to call him. At that stage the Commission was
not aware of the existence of The Media News.
[ 23] Media24 subsequently indicated that it had decided not to call Pantene. The
Commission contacted him and then obtained a witness statement from him
as we discuss later.6
[ 24] Media24 ultimately elected not to call any other factual witness even though it
was entitled to do so. We draw the inference that had it been able to adduce
evidence that Vista was losing market share or having to lower prices to levels
prevalent before GNN's exit they would have called a witness to attest to this.
[ 25] We say this for the following reason.
[ 26] We know from the merits hearing that Media24 staff report regularly and
comprehensively, to both the Bloemfontein office and Head Office on the
fortunes of their publications including reflecting on the competitive
environment. None of this evidence, which would have been very useful, was
forthcoming in the remedies hearing. In any event even if the reporting culture
had changed from what it was during the complaint period, one would have
expected one of Vista's staff to be able to attest to the state of competition in
the market and its effect on Vista. No witness would be better placed to do this
than someone working for Media24.
[ 27 ] Instead of this possible evidence, it chose to rely on a report submitted by its
economists, Genesis. The economists also did not rely on any evidence that
had emanated from Media24 other than spread sheets used in an exercise to
compare common advertisers. Instead they conducted research on other
publications distributed in the Goldfields area in terms of the following criteria;
print order, advertising rates, pagination (i.e. number of pages), distribution
footprint, language and where known, and the details of who the publisher
was.

footprint, language and where known, and the details of who the publisher
was.
6 Commission's record from page 50-55.
6

-- -- - - --1
[ 28] The source of this information was based on research conducted at libraries
and publicly available information. Since the Commission did not contest the
data in this survey we will assume that it is correct.
[ 29] The other source was an advertising overlap comparison. They selected
various publications in the Goldfields area and compared how much their
advertising overlapped with that of Vista. A table was prepared setting out the
overlaps in percentages. 7
[ 30 ] Based on this, Genesis advanced two propositions; first, that there had been
new competitive entry into the market since the exit of GNN and Forum.
Second that weekly community papers which had been in the market at the
time of the closures of the latter two were still in the market.8
[ 31 ] Mention was made of the entry of various new papers. Of these, they
considered The Media News to be the most significant. Of the others
mentioned, one was a Media24 publication, which has since come and gone,
as we discuss more fully later in the section on the interdict, while two, The
Article and Kasi are very recent entrants.
[ 32] The Article is an English language publication which entered the market in
January 2016. The Article's advertising rates are half those of Vista's and this
is not surprising as its distribution is one third of the latter's size. Its typical
pagination is 8 pages compared to Vista's typical pagination which ranges
from 32-48 pages.9 As part of its report, Genesis performed an exercise to
gauge which publications shared common advertising with Vista and if so what
percentage of advertising overlapped. The thesis behind this was that the
greater the overlap the more likely the publication exerted any competitive
pressure on Vista.
[ 33 ] However in respect of The Article, Genesis' advertising overlap exercise
suggested that Article rated the lowest with a 3.7% overlap with Vista, when
7 See Genesis report page 5, page 106 of the trial bundle.

7 See Genesis report page 5, page 106 of the trial bundle.
8 Media24 heads of argument version one, pages 11-12.
9 Annex M1 of the Respondents submission on publications in the Goldfields Area found at page 41
and 42 of the trial bundle.
7

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compared with the 8 others it had selected in this sample. On these facts The
Article can hardly be regarded as a significant competitive threat to Vista.
[ 34] The next new entrant is Kasi. It too compares modestly with Vista. Kasi, is a
weekly publication published in Bloemfontein with its target market identified
as black readers.10 It has a typical pagination of 8 pages and its advertising
overlap with Vista is 7.9%.11 It is further differentiated in terms of language.
Whilst having some English content. its other main language is Sotho. Vista
on the other hand uses English and Afrikaans content.
[ 35] Dumelang News entered earlier, in 2012. But we are told very little about it
despite it having been in the market for four years. Presumably Media24 with
its presence in the market could say a bit more about it than what the
economists have derived from libraries, but it did not do so.
[ 36] Dumelang News is based in Mangaung (Bloemfontein) so the extent of its
presence in the Goldfields area is not clear. Its advertising rates are higher
than those of Vista's despite having a lower print order. Its advertising
customer base is described as mainly emanating from government and
Genesis does not include it in its advertising overlap scenario. On these facts,
it too does not appear to be a viable competitor. Without going into lengthy
detail and assuming Genesis' provided information is correct. the remaining
competitors do not appear to be viable competitors to Vista. This is because
they are either distinguishable in terms of content, geography, language
format or frequency or are minor players who do not appear to constitute a
suitable alternative to Vista.
[ 37] In contrast to the desk research presented by Media24 as evidence, the
Commission presented three witness statements and viva voce evidence from
two of these witnesses. Granted all these witnesses were from The Media
News, but as it was considered the most likely successor to GNN as the

News, but as it was considered the most likely successor to GNN as the
closest competitor to Vista in the market, their evidence was highly relevant.
10 Annex M1 of the Respondent"s submission on publications in the Goldfields Area found at page 43
of the trial bundle and page 5 of the Genesis Report found at page 108 of the trial bundle.
11 Ibid Annex M1.
8

[ 38 ] Pantene the founder of The Media News, as noted, gave the Commission his
witness statement, but then, despite being subpoenaed did not arrive to testify.
No explanation was given for his absence. Nevertheless, since both sides
sought to rely on his witness statement, admittedly different portions of it, we
will also rely on portions of it, to the extent it has not been contested or where
it has, to the extent it has been confirmed by those who gave viva voce
evidence .12
[ 39] Pantene's evidence is relevant to two aspects. First; the difficulty of entering
the market and second, once having entered, in sustaining a publication in the
face of competition and a sceptical customer base.
[ 40] Media24 relied on the fact of his paper's entry and his claim that his initial print
order was 50 000.13 This, it said showed the market was susceptible to new
entrants and the fact that Pantene had entered and as at date of our hearings
was still there, was proof of this.
[ 41 ] However read as a whole Pantene's statement reveals ambition without
fruition. Pantene entered the market despite having no experience in the
media industry but with his general business experience. It appears that his
business strategy was premised on getting government advertising as the
mainstay of the publication. The promised advertising did not materialise.
Despite an initial print order of 50 000, an order larger than that of Vista's
35 000, The Media News soon experienced decline, both in print order and
advertising.
[ 42] The Commission suggested that the decline was due to the exclusionary
strategies employed by Media24, whilst the latter suggested that it was due to
a number of bad strategic calls made by Pantene.14
12 As the Commission pointed out in argument in terms of s 55(3) of the Act the Tribunal's discretion to
accept evidence is wider than that of a court.
13 Pantene witness statement paragraph 11 Commission's record page 50.

13 Pantene witness statement paragraph 11 Commission's record page 50.
14 As examples of bad strategic calls, he had started off calling the paper Mafia News before changing
it to The Media News. He had also chosen to publish over the weekend instead of at the end of the
working week which as we heard in the merits hearing was the best day for local advertising, a
community newspaper's primary revenue.
9

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I '
[ 43] However unlike Media24 and despite not having the evidential burden, the
Commission called the only viva voce evidence. The Commission's evidence
covered two themes. That entry into the Goldfields market while possible, was
proving unsuccessful and second that Media24 had again engaged in a
predatory strategy, using another paper as a fighting brand. We deal with this
latter point later when we discuss the interdict.
[ 44] The Commission called as viva voce witnesses Ms Anneline Kruger and Ms
Lorette Douglas, the former a current employee and the latter an erstwhile
one, of The Media News. Both had been engaged in selling advertising for
The Media News.
[ 45 ] Their evidence was consistent on the following aspects:
• that Media News was a declining force and had struggled in the market;
• that to gain acceptance in the market, advertisers had to believe a
publication was likely to last; and
• that Vista did not have many viable competitors.
[ 46 ] Although Kruger and Douglas were cross-examined their version on these
issues was not discredited.
[ 47] Neither was sanguine on the prospects of The Media News. Kruger's evidence
which was the stronger on this point was that Media24 could not last on its
current finances.
[ 48] In cross-examination counsel for Media24 suggested to Kruger that there was
no basis to her assertion, and that Pantene was still, as per his witness
statement, wanting the paper to succeed.15 Her response to this was Pantene
was: " ... a little bit idealistic ... "16
[ 49] It was then put to her that she did not have personal knowledge of the paper's
finances and was thus in no position to comment on its prospects. Her
response to this was that she did not need access to the finances to come to
15 See transcript page 82.
16 See transcript page 83.
10

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her conclusion. As she put it: "/don't do the finances, but yes, I can see what's
going on around me clearly. "17
[ 50] Although Pantene's witness statement does contain paragraphs evidencing
his determination to continue he puts up no facts for why he might later be
expected to succeed. Indeed the facts he does put up, point to the paper's
difficulties. Inter alia he stated in his witness statement that:
• When he started, the print order was 50 000 but had dropped to 15 000.
• Although the paper attracted advertisers initially they have since returned
to Vista or stopped advertising with The Media News.
• He had to heavily discount rates. He mentions his half page rate going
from R 2850 to as low as R 1000.
• The pagination decreased from 16-20 pages to 8 pages by November
2015.
• Late payment to the printer, which demanded upfront payment, had
resulted in delays in printing.
• Although he had budgeted for initial losses in the first year, actual losses
were more than double this amount and the profitability of the paper was
declining, not improving.18
[ 51 ] There is little doubt that The Media News, the strongest candidate put forward
as evidence of new competitive entry, is a troubled publication. Despite its
ambitious start by an entrepreneurial owner it has stumbled in the market
place and lost credibility with advertisers which is the lifeblood of sustained
entry for a newspaper that needs to survive on this revenue for its income.
Conclusion on facts
[ 52] We conclude that Media24 bears the evidential burden to establish that the
market had since the exit of Forum and GNN, been restored to competition.
We find that it has failed to do so. The Commission, despite not having the
evidential burden, has led sufficient evidence to suggest that market
conditions have not materially changed since 2009 and that despite evidence
17 See transcript page 83.
18 See Pantene witness statement paragraphs 11. 18, 24, 33 and 34.6, record pages 50- 55.
11

of some entry, this has not challenged the dominant position and market
power of Vista. The competitive position of the market remains as it was when
we gave our decision on the merits. Therefore consideration of a remedy to
restore competition is justified. We go on to do this in the next section.
PARTS
WHAT TYPE OF RESORATIVE REMEDY SHOULD BE IMPOSED?
[ 53] We now turn to discuss the three proposed remedies, the Interdict Remedy
and the Investment Remedy proposed by the Commission and the "Credit
Guarantee Remedy" which we have adopted and refined in our order. We
have not made any comment on the alternative remedy proposed by Media24,
the Goodwill Gesture Remedy. The Commission was correct in its criticism of
its inadequacy. The remedy was of all proposed the least likely to restore
competition to the market and was remarkably meagre.19 Given that it is not
contained in Media24' s latest submission it appears to no longer be persisted
with and no further comment on it is necessary.
(i) Interdict remedy
[ 54] The Commission has proposed an interdict as a component part of the three
remedies it proposes.20 The remedy as now formulated reads as follows:
"Save in the event that the Commission consents to it doing so, Media24
is prohibited for a period of six years from publishing more than one
community newspaper in English or Afrikaans in the Goldfields
market ... "21
[ 55] It views this remedy as complementary to the Investment Remedy, which we
discuss later. Media24 opposes the interdict on both legal and factual grounds.
19 Supra Footnote 3.
20 The three are the Interdict, the Declaratory Order and the Investment Remedy.
21 In the Commission's initial submission there was no time limit. The six year limitation is an addition
introduced in their heads of argument. So also was a definition of the Goldfields market, (See Annexure
H2 to the Commission's heads of argument). The Commission defines the Goldfields market as "the

areas encompassing Welkom, Odendaalsrus, AllanR/dge, Riebeeckstad, Theunissen, Ventersburg,
Thabong, Meloding, Kutluanong and Phomolong."
12

[ 56 ] The Commission had proposed an interdict from the outset when it filed its
initial submission.22 It pointed out, correctly, that since Forum, the vehicle
through which the predation strategy had been carried out, had been closed
down there was no point in granting any interdictory relief against it However
it still maintained that an interdict was appropriate against Media24 to prevent
it from launching a similar fighting brand whilst Vista was still in the market
[ 57] Initially, the Commission had not based its case for an interdict on allegations
that the fighting brand strategy had re-occurred. Rather the argument was that
an interdict was necessary to protect a new entrant from a repetition of the
unlawful conduct whilst it gained market traction.
[ 58] After consulting with Pantene, the Commission bolstered this aspect of its
case by alleging that it had now got evidence that Media24 was, post 2009,
again a recidivist.
[ 59] Pantene's evidence (we only have his witness statement on this point; recall
he did not present himself to testify viva voce) was that following the
establishment of The Media News it had immediate success and that "Vista
was intimidated by this and the competition that it posed. "23
[ 60] The Media News, he claimed had much lower advertising rates than those of
Vista.
[ 61 ] He then mentions that Media24 introduced a new paper in the market called
The Express which was about the same length as The Media News, eight
pages.24 His suspicion (in fairness he doesn't claim absolute certainty on this
point) was that The Express entered the market after The Media News had
entered. The Express, he alleged, charged much lower rates than did The
Media News.25
22 Filed on 9 November 2015.
23 Pantene witness statement, paragraph 25 page 53.
24 In fact the paper was called the Goldfields Express". Pantene in his witness statement referred to it
as "The Express".
25 Pantene witness statement paragraphs 27-28 record page 53.
13

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[ 62 ] He also alleged that Vista then began to charge lower rates - at least this is
the inference we are expected to draw from what he observes - because
certain advertisers who had previously advertised with him, because they
could not afford to advertise with Vista were now advertising with Vista.26
[ 63] The suggestion of Vista lowering its rates to advertisers who advertised in The
Media News is then taken up by Kruger and Douglas who each mention
specific examples.
[ 64] In its cross-examination of these two witnesses, Media24's counsel presented
spread sheets emanating from Vista's records which, prima facie, suggested
that these customers had not been charged the lower rates these witnesses
alleged that they had been as told by customers concerned. The witnesses of
course could not comment on the accuracy of the Media24 spread sheets nor
could they do more than repeat what they had been told by customers. This
aspect of the evidence is thus left unresolved.
[ 65] However it is not clear what the Commission sought to achieve by this
evidence concerning Vista's pricing conduct during this period. If it was alleged
that Vista's pricing was itself predatory, then the interdict, which applies only
to prohibiting a new entrant from Media24, does not remedy this. If the conduct
was a combination of the two - i.e. Media24 using both Vista as a price cutter
in conjunction with a new predatory fighting brand in the form of the Goldfields
Express, then again the remedy was inadequate as it does not apply to Vista
nor was any theory put up that Vista was indeed pricing unlawfully. It was it
seemed a throwback to the targeted pricing theory that had originally been put
up in the complaint referral which we had struck out prior to the
commencement of the merits case for lack of particularity. 27
[ 66] This takes care of the evidence concerning Vista's pricing conduct. What
remains for us to consider is the more pertinent evidence used to support the

remains for us to consider is the more pertinent evidence used to support the
basis for the Interdict Remedy. Whether the entry of Goldfields Express was
26 Pantene witness statement, ibid, paragraph 29.
27 See The Competition Commission and Media 24 (Pty) Limited 016824 and para 51 of the Merits
decision.
14
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evidence of recidivism by Media24 i.e. was Media24 reintroducing a fighting
brand into the market to eliminate The Media News?
[ 67] Media24 alleges that Goldfields Express entered the market in October 2013
a year before The Media News had entered.28 The Commission does not
contest this fact and we must accept that it is correct. This would suggest that
Pantene's theory of it being introduced as a predatory vehicle to counter his
paper is incorrect. Why would the predatory vehicle have been introduced
before the entry of its prey?
[ 68] Goldfields Express according to Media24 was closed in September 2015.29
The Commission, but not any of its witnesses, suggested in argument that
Goldfields Express was closed down in the same month that the Tribunal
handed down its decision on the merits. But this point is speculative. There is
no evidence to indicate that there is any connection between the two events.
[ 69] Media24 did not lead any oral evidence concerning Goldfields Express. The
most we have is Exhibit A which comprises a few pages of an edition dated
October 2013, evidencing it preceding the entry of The Media News ( early
November 2014) and a business plan for the paper. The business plan was
introduced to suggest that the publication was intended to be differentiated
from Vista because its focus was on " ... a strong township community editorial
[with]content in English"30
[ 70 ] Admittedly Media24 did not lead any evidence about why Goldfields Express
was opened in 2013 and why it was then closed in 2015; but it does not bear
the onus to prove that The Interdict Remedy is an appropriate remedy, the
Commission does. The Commission's case is that Media24 has been a
recidivist in the Goldfields area, by repeating the strategy of using a fighting
brand even after these proceedings had been launched and hence an interdict
remedy was necessary.
28 See Media24 supplementary heads paragraph 49.
29 See page 114 of the trial bundle.

28 See Media24 supplementary heads paragraph 49.
29 See page 114 of the trial bundle.
30 Exhibit A page 8. This was put to Douglas in cross examination who seemed agreeable with the
proposition. Also see Transcript page 28.
15

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. ;
!
[ 71 ] As Pantene's evidence on this aspect cannot be relied on; and absent any
other evidence the paper was pricing below some predatory measure of cost
or whether it was indeed a competitor of The Media News; the Commission
had no other evidence of recidivism.
[ 72] In the absence of evidence of recidivism the question is whether the Interdict
Remedy can be justified simply on the facts of the case on the merits. The
only remaining justification for the interdict then would be that it is necessarily
ancillary to the restorative remedy proposed by the Commission i.e. its logic
would be that in order to ensure that new entry is successful, Media24 has to
have one hand tied behind its back to protect a new competitor while it finds
its way in the market place. However even the justification for that case has
not been made out.
[ 73] The danger with the speculative nature of the proposed interdict is that it is a
supply limiting, not a supply increasing type of remedy which may serve to
harm consumers by denying them choice, without necessarily having a
demonstrable benefit in ensuring the entry of an effective competitor.
[ 74] The logical interdict would be one that prohibits Media24 from introducing a
fighting brand into the market. That is the conduct found unlawful, not the
conduct of publishing another title similar to Vista. However the Commission
is aware that such a remedy would be ineffectual given the history of the
litigation of this case. If the interdict was to prohibit a fighting brand, it would
require the same evidence as that of a new complaint referral, except that if it
succeeded on the merits it would have a penalty as a remedy. However the
declaratory order and the consequences for a repeat contravention of section
8(c), discussed earlier, serve the same deterrent purpose and would require
the same evidential burden.
[ 75] For this reason no doubt the Commission sought an interdict in the form that

[ 75] For this reason no doubt the Commission sought an interdict in the form that
it did. To enforce the interdict it would only have to prove that Media24 had
published the title in question in the Goldfields area. It would not have to prove
the publication was a fighting brand. However, whilst this is understandable,
this remedy is overbroad, as it does not restrict merely unlawful conduct in its
16

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sweep, but lawful conduct as well. As mentioned above, in terms of the
interdict as framed by the Commission, lawful pro-competitive supply
increasing conduct is condemned at the same time as unlawful conduct.
[ 76] In our view the interdict is not an appropriate remedy on these facts. The
declaratory order and the fact that for a repeat contravention Media24 would
face the possibility of an administrative penalty even if the finding is made
under section 8(c) of the Act, constitute a sufficient disincentive for Media24
to repeat the conduct found in the merits case to have contravened the Act.
(ii) The Investment Remedy
[ 77] The Commission also proposed an investment remedy on the following terms:
Media24 would be required to fund a new entrant into the Goldfields market
to the amount of R10 million. The funding money would be paid to the Media
Diversity Development Agency ("MDDA") a government fund that funds new
media. The MDDA would decide on an appropriate candidate and would
administer the funds. The amount had been calculated based on the budget
a hypothetical new entrant would require over three years as start-up capital.
Three years was regarded as the time a new entrant would need to enter the
market and a print order of 25000 was considered the necessary size for a
publication that would constitute an effective competitor to Vista. Vista has a
print order at present of approximately 35 000 and its pagination ranges from
32 to 48.31
[ 78] This remedy was given the most attention during the hearing with no
consensus emerging between the two parties on any of the issues.
[ 79] In summary disagreement arose in the following areas:
• A legal debate over whether the subsidy amounted to a disguised penalty.
Media24 argued that if a penalty was not a competent remedy neither
could the Tribunal order it to pay a subsidy to rivals. A subsidy and a
penalty it argued, were two sides of the same coin.

penalty it argued, were two sides of the same coin.
31 Annex M1 of the Respondents submission on publications in the Goldfields Area found at page 41 of
the trial bundle.
17

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• Policy arguments over the principle of the subsidy. Genesis argued that
subsidies distort competition, because they work to the disadvantage of
other competitors which don't receive the subsidy and thereby distort
market mechanisms. For instance with the cushion of a subsidy the
recipient might charge lower rates for advertising not based on superior
efficiency. Genesis relied on European competition policy arguments that
oppose state subsidies.
• The methodology of calculating the subsidy. Genesis argued that if a
subsidy was to be ordered it should exclude certain costs such as sunk
costs.32
• Disputes over methodology naturally led to a dispute over the size of the
subsidy. Unsurprisingly the Commission set this figure higher than
Media24 did. It initially set this amount at R 15 million it was then revised
down after the Commission adopted a change in its methodology for
calculating what costs were appropriate to sponsor. The revised figure
then went down to R 8 million rand. However by the time of final argument
the Commission had come back up to a figure of R 10 million.33 Genesis,
whilst still arguing that a subsidy was inappropriate, said that if it was
decided to order one, their final amount submitted at the hearing should
be set at R3 362 449.34
• Media24 was opposed to the fund being administered by the MDDA. It did
not advance any reasons for this.
32 A sunk cost is a cost that has already been incurred and thus cannot be recovered. A sunk cost differs
from future costs that a business may face, such as decisions about inventory purchase costs or product
pricing. Sunk costs (past costs) are excluded from future business decisions, because the cost will be
the same regardless of the outcome of a decision. See footnote 55 of the Merits Decision.
33 See transcript page 154 and paragraph 3.2 of the Draft order which is Exhibit H2. The Commission
attributed these changes to an attempt to narrow the dispute with Genesis Media24's consulting

attributed these changes to an attempt to narrow the dispute with Genesis Media24's consulting
economist. The move to R 10 million was because the Commission adopted the Genesis methodology.
However it soon became clear that it had omitted certain costs it believes should have been included
to cover office rental, auditing fees and certain miscellaneous expenses and hence the fund quantum
was revised upwards.
34 See Respondent's supplementary heads of argument, page 40.Genesis in their report initially
calculated the following figures per 2 model scenarios they created; Scenario A R 1 652 265 and
Scenario B R718 677, page 114 and 119 of the trial bundle respectively.
18

I ,
[ 80] We do not believe that the Investment Remedy is appropriate. Our reasons
turn on a simple point which we consider below and we therefore do not need
to consider the other arguments raised by Media24.
[ 81 ] The rationale for the remedy is to restore competition to the market that was
lost through the exit of GNN as a result of the unlawful predation strategy
perpetrated by Media24.35
[ 82 ] We have no criticism of this rationale given our earlier finding that competition
has not been restored to the market. The question is whether the fund will be
effective in doing so?
[ 83] If it is we can then consider the other objections that have been raised by
Media24.
[ 84] In our view it will not be an effective remedy. The problem with the fund remedy
is that there is very little certainty that the recipient will use the funding to
compete effectively with Vista. The draft terms do not require that it does. The
closest they do this is in paragraph 4 which states "the purpose of the fund is
to establish or increase competition in the Go/dfields community newspapers
market." 36
[ 85] Second, although the fund is not restricted to one recipient it has been
designed for one recipient. The careful calculation of the budget only
presupposes a single entrant.
[ 86 ] This makes the fund remedy very risky. What guarantee is there that the
recipient will be successful, compete directly with Media24 as opposed to
differentiating itself from it or that it will not use the subsidy up and then exit?
There is no existing candidate suggested for the recipient and this is left to the
discretion of the MDDA, despite the laying down of certain guidelines. The hit
and miss quality of this remedy (despite the Commission's hard work, it has
to be acknowledged, in working out a carefully considered budget for it over
35 In its draft order the Commission states; "The purpose of the fund is to establish or increase
competition in the Goldfields community newspaper market." See Exhibit H2 paragraph 4.

competition in the Goldfields community newspaper market." See Exhibit H2 paragraph 4.
'' Page 6 of the Trial bundle.
19

three years) suggests that the cost benefit of it, make it inappropriate to
achieving its stated objective.
[ 87] For this reason we have decided not to grant this remedy and opted to impose
the credit guarantee remedy, as discussed below. In making this decision we
have not taken a view on the legal argument (that the subsidy amounted to a
disguised penalty or the other policy objections relating to a subsidy.
(iii) Credit Guarantee Remedy
[ 88 ] The Credit Guarantee Remedy was offered by Media24 as a response to a
query from the Tribunal about a possible remedy as an alternative to the
Investment Remedy discussed above.
[ 89] We first discuss the rationale for this remedy by explaining the high barriers to
entry community newspapers faced. We then go on to discuss the specifics of
this remedy. During the course of the merits hearing as well as the remedies
hearing, one of the major barriers to entry or existence in the market for a
community newspaper was that typically it was not part of a vertically
integrated group, like Vista is in respect of Naspers and Media24, which give
it access, in-house, to printing and distribution.
[ 90 ] As mentioned earlier, during the course of the remedies hearing the Tribunal
enquired if a remedy could be crafted to deal with the major barriers to entry
in the community newspaper market viz. funding the costs of printing and
distribution.
[ 91 ] Let us first consider distribution. This is the third biggest nominal expense of
a community newspaper, after printing and salaries. Although third,
distribution if it is to be efficient, has an opportunity cost far higher than its
accounting cost. Both Mr Hans Steyl during the merits hearing and Douglas
during the merits hearing indicated how much the reputation of the paper was
undermined if distribution was inefficient. Lack of proper distribution in Welkom
had led Steyl to choose Media24's logistics and distribution division On the

had led Steyl to choose Media24's logistics and distribution division On the
Dot. Pantene says in his witness statement that he had tried to use On the
Dot for distribution and they had given him a quote but they never reverted to
20

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him thereafter. 37 Kruger recalls Pantene having had conversations with On the
Dot on three occasions in her presence and although she was not aware of
whether a quotation was given she supports his version that On the Dot never
came back to him to her knowledge.38
[ 92] The Media News had tried its own distribution solution and from testimony of
Pantene this was not successful. Ms Kruger described in her testimony the
difficulty The Media News was having with its distribution. It had used two
distribution firms and then was relying on one of its employees to do the job.
"MS KRUGER: No, its quite impossible for one man to run a team for
the whole of the Goldfields, it's not humanly possible at all."
ADV NORTON: So you are still getting complaints about distribution?
MS KRUGER: Yes, that's correct. "39
She linked its distribution problems to the loss of advertising.
"ADV NORTON: And this was the time when several of your regular
advertisers were starting to reduce their advertising in Media News?
MS KRUGER: Yes, they did, mostly because of distribution, not anything
else."
[ 93 ] As noted earlier the biggest expense for a community newspaper are its
printing costs which constitute roughly 35 - 45% of its costs.40 Pantene in his
witness statement described how The Media News had to use Paarl Coldset
for its printing and that Paarl " ... dictates very onerous and non-negotiable
terms such as payment upfront for print orders. "41 He points out that while
Paarl Coldset demands upfront payment many of The Media News,
advertisers don't pay or pay late. This meant that cash flow problems " ... has
37 Pantene witness statement paragraph 15 record page 51.
38 Transcript page 81.
39 Transcript page 83.
40 In Exhibits H1 and Annexure H1 .1 we use year 3 of both the Commission's and Media24's budget
estimates as both have the same size print order in that year. Taking both figures rounded up we get
this range.
41 "Pantene witness statement paragraph 34.4 record page 55.
21

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resulted in delays in the printing of The Media News, which in turn damages
the reputation of the newspaper. 42
[ 94 ] Douglas mentioned that The Media News had on one occasion not been
published as scheduled for a particular week. When advertisers had queried
why, she blamed the printers. This was not true. The reason was that the
paper did not have enough money to pay for the printing upfront.43
[ 95 ] In order to win over advertisers who can pay, a newspaper needs to have
credibility. As Ms Douglas put it from her experience advertisers don't trust
anyone new.
"You know you get a lot of fly-by-nights, they call it ... "and
"You know you would tell them I'm going to deliver 25 000 copies, but I
mean I had no proof. So they are used to the Vista. They've known it for
years. They know it come out on a Thursday and they like that comfort
zone. They don't like getting ... so its very difficult to sell. "44
[ 96] The reason community newspapers cannot match Media24's efficiencies in
printing and distribution is that they do not have the cash flow to secure these
services on a reliable or consistent basis. As Douglas testified, a paper needs
to have the cash flow to pay for printing which has to be paid for upfront, but
advertisers only pay later, once they see their adverts are in the paper.45 The
same problem applies in respect of distribution.
[ 97] The Credit Guarantee Remedy is an attempt to address these problems. We
explain why.
[ 98] Media24's parent company, Naspers, owns printing works in Bloemfontein
through its subsidiary Paarl Cold set, the nearest printer for Welkom customers
and where Vista is printed. It also now prints The Media News.
42 Ibid paragraph 34.6.
43 Douglas ibid page 64 paragraphs 17-18.
44 Transcript page 11.
45 Transcript page 12.
22

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[ 99 ] In terms of the credit remedy, Media24 undertakes to provide credit for a
community newspaper for a period of 90 days if they print with Paarl Post Web
in Bloemfontein. The same credit guarantee is extended to the newspaper if it
uses On the Dot - a Media24 business, for distribution. We know from both
the evidence of Steyl in the merits hearing (who after lack of success with
other distributors turned to On the Dot) and Pantene in the present hearing
(who wanted to, but for some reason was unsuccessful in procuring On the
Dot's services) that this company is the most efficient and reliable newspaper
distributor in the Goldfields area.
[ 100 ] Thus a major barrier to entry - the cash flow squeeze -is eliminated, because
a publication no longer has to pay printers and distributors from its reserves.
With a period of credit a publication has a window period to collect its
advertising revenues for that edition, before it has to pay for printing and
distribution. Second, both these companies have a good reputation in the
market for reliability and quality. These are services that typically new entrants
or smaller publications have struggled to secure.
[ 101 ] Media24 indicated that they were willing to offer up such a remedy and after
the hearing sent a proposed draft.
[ 102] We have made some changes to the draft remedy as originally proposed by
Media24.
[ 103] Media24 restricted this offer to only two 'selected' publications who were either
currently in the market or were new entrants. There are two problems with this
formulation. First, it is not clear from the draft who will do the selection.
Second, if either or both failed there is no provision for whether the offer would
be extended to others.46
[ 104] The order we have imposed is designed to avoid these difficulties.
[ 105 ] First, it does not limit the offer to two publications. Rather, it is available to any
publication that meets the criteria laid down in paragraph 1 of Annexure A to

publication that meets the criteria laid down in paragraph 1 of Annexure A to
the order. We have however limited the time period for acceptance of the offer.
46 See paragraph 3.2 of their draft.
23

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The Media24 draft did not provide for a time period for acceptance of the offer,
so as we understand it, the offer lapsed once there had been two acceptances.
[ 106 ] Second, it obviates the need for any person to be designated to perform the
selection of those who can benefit from the remedy. This is an important
difference for us and distinguishes this remedy from the problems associated
with the Investment Remedy that we discussed earlier. Under the Credit
Guarantee remedy the market, not a designated third party, will pick the
winners, while the potential candidates are not limited in number. Whilst of
course there is no guarantee even under this remedy that an effective
competitor will re-emerge to contest the market against Vista, it makes it more
probable than under either the Investment Remedy or the limited Credit
Guarantee Remedy proposed by Media24. The criteria for funding however
limits the potential candidate publications, in terms of content, print order and
pagination, to those most likely to constitute competition for Vista. Thus
although we have not confined the number of candidate publications who can
accept the offer, it is not a free for all. If a candidate does not meet the criteria
it can be refused. Nor if a publication meets the criteria does it get the offer for
free - it gets credit for 90 days. If it does not pay within the stipulated 90 days,
the offer ceases. This too disciplines acceptance of the offer to candidates
more likely to succeed.
[ 107] We have provided that the Credit Guarantee Remedy remains available to a
publication for three years from time of acceptance. This is the same period
provided for by Media24 in their draft. Both the Commission and Genesis used
a period of three years as the subsidy period, when they did their budget
projections for the costing of the Investment Remedy. The Commission
justified its choice of the time period required on the basis of a Media24

justified its choice of the time period required on the basis of a Media24
document which states that it takes an average of three years for a new
publication to become profitable.47 This period seems reasonable. We point
out that during the Merits hearing, Mr Jan Malherbe, the erstwhile chief
47 This document was produced during the merits case in response to a summons from the Commission.
See Page 299- 303 of the Merits Decision.
24

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executive of Media24 had testified that starting a newspaper is " ... a long-term
battle ... [which] is not a sprint. It is a marathon."48
[ 108 ] The Commission had opposed this remedy, at least in the form originally
proposed by Media24 in its draft. Some of the changes we have imposed we
believe will meet some of its concerns. The Commission however still favours
its Investment Remedy but we differ with it in this respect.49
[ 109 ] The remedy also avoids some of the other problems associated with the
Investment Remedy. It avoids the subsidy problem. Second, it is not
disproportionately harmful to Media24. In fact as a group its sister companies
may benefit from increased business. At worst Media24 may be owed money
for a failed entrant if the publication cannot pay its bills.
[ 110 ] Apart from these changes the remedy is largely on the lines proposed by
Media24. We have however added in provisions for providing for the
advertising of the remedy and for enforcement.
[ 111 ] We have required that the remedy be advertised widely so that would be
entrants and existing publications are aware of it. The remedy cannot be
effective unless those in the market or who wish to enter are made aware of it
throughout the offer period.
CONCLUSION
[ 112] We have found that despite the lapse in time between the merits hearing and
the remedies hearing, competition has not been restored to the market.
Therefore a remedy to restore competition is appropriate.
[ 113] An interdict is not appropriate on these facts. The Investment Remedy is
unlikely to prove effective. We have therefore imposed the Credit Guarantee
48 Page 1450 of the transcript for the Merits Hearing.
49 See letter from the Commission's attorneys forwarded after the conclusion of the hearing on 14 April
2016. The Commission's central argument was that the remedy does not overcome the major barrier
to entry which it argues are sunk costs. Printing and distribution costs it argues cover only 50% of the

total cost of a newspaper.
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Remedy (as amended by ourselves) in conjunction with a declaratory order as
the appropriate relief in this case.
[ 114] In our order set out below, the declaration covers the period from January
2004 to February 2009. However in our Merits Decision we found that the
contravention period was from January 2004 to April 2009 i.e. two months
longer. The reason for this difference is that the Commission persists with the
complaint period it had defined in its referral, which had the February end date,
while in the Merits Decision we extended the period to April, because on the
evidence that was when GNN exited the market. This discrepancy was not
picked up during the remedies hearing and the terms of the declaration viz.
the February end date was common cause between the Commission and
Media24. We therefore accept what has been agreed to between the parties,
and leave the period ending in February. (See paragraph 1.1 of the order.)
[ 115 ] Not much turns on this change to the end date, as an administrative penalty
is not competent, making duration irrelevant. Duration might be relevant to a
civil claim, if one is ever brought, but its likely effect is again trivial.
[ 116 ] Our remedy in this matter is set out in the order below.
ORDER
1.1 It is declared that Media24's pricing conduct in the market for
advertising in community newspapers in the Goldfields area of South
Africa ("the Goldfields market") during the period January 2004 to
February 2009 constituted a contravention of section 8(c) of the
Competition Act, Act 89 of 1998 ("the Declaratory Order").
1.2 Media24 shall ensure that from one month of the date of this order, all
publications which are current participants or new entrants in the
Goldfields market (the beneficiaries) shall be entitled to credit terms
with (a) Media24's associated company Paarl Coldset Proprietary
Limited; and (b) Media24's distribution business On The Dot ("the
service providers"), ("the credit terms"), on the conditions set out in

service providers"), ("the credit terms"), on the conditions set out in
Annexure A to this Order ("the Credit Order").
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1.3 Media24 shall cause to be published in two newspapers (published in
English/Afrikaans and Sesotho) circulating in the Goldfields area a
notice of this Order as well as an explanation of the credit terms which
it is obliged to offer in terms thereof. This notice shall be published no
less than fifteen days after the date of this Order and thereafter on the
first anniversary of the Order.
1.4 Within a period of seven days as from the dates of publication of the
said notice in 1.3 above, Media24 must deliver a copy of the said
notice to every one of the existing publications in the Goldfields area.
1.5 Within three months of the date of this Order and three months of the
first anniversary of the Order, Media24 shall provide the Commission
with proof of its compliance with the obligations set out in 1.3 and 1.4
above.
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ANNEXURE A
1. Any publisher of a community newspaper which is a current participant
or potential new entrant in the Goldfields market and whose content is
predominantly in English and Afrikaans and contains general community
news, shall be entitled to the credit terms as set out in 2 below. This offer
shall be kept open for a period of 25 months from the date of this Order.
2. The credit terms -
(a) shall be 90-day terms from date of invoice;
(b) shall apply to the following services to be provided by the credit
providers in respect of each of the beneficiaries at a price
consistent with their ordinary commercial price:
(i) printing (by Paarl Coldset Proprietary Limited) of a
weekly community newspaper in tabloid format to a
maximum of 24 pages, with a maximum print order
of 30 000 copies;
(ii) door-to-door distribution (by OnTheDot) within the
Mathjabeng Municipality of a weekly community
newspaper in tabloid format to a maximum of 24
pages, and with a maximum print order of 30 000
copies;
( c) shall apply to a pro-rata portion of invoices in the event that the
page numbers or the print order exceed the maxima set out
above;
(d) shall be provided for three years (36 months) from the date of the
first use of the service on these terms. At the end of this period,
the service providers will offer services to the beneficiaries on
terms consistent with their ordinary commercial terms;
( e) shall be terminated in respect of a beneficiary upon (i) default by
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a beneficiary in respect of any of its obligations to either of the
service providers; or (ii) the beneficiary's exit from the market.
3. A beneficiary shall be entitled to the credit terms even if it chooses to utilise
only one of the services referred to above.
4. Any publisher who has reason to believe that Media24 has not complied
with these conditions may refer their complaint to the Competition
Commission at the following address ccsa@compcom.co.za
Mr orman Manoim
06 September 2016
DATE
Ms Yasmin Carrim and Prof Merle Holden concurring
Tribunal Researcher:
For the Commission:
For Media24:
Derrick Bowles and Aneesa Raval
Rafik Shana S.C. assisted by Gavin Marriott,
instructed by Gildenhuys Malatji for the
Commission
David Unterhalter S.C., Michelle Norton S.C. and
Zaytoen Cornelissen instructed by Werksmans
Attorneys.
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