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Competition Commission v Primedia (Pty) Ltd (CR294Feb18/SA242Jan19) [2019] ZACT 20 (27 February 2019)

75 Reportability
Competition Law
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Brief Summary

Competition Law — Consent Agreement — Section 49D of the Competition Act — Primedia (Pty) Ltd admitting to contraventions of section 4(1)(b)(i) of the Competition Act regarding price fixing and trading conditions — Tribunal confirming settlement agreement with Primedia, including an administrative penalty of R9 605 884.64 and commitments to support small agencies and contribute to an Economic Development Fund.

Comprehensive Summary

Summary of Judgment


Introduction


The matter was a consent settlement in the Competition Tribunal, brought as an application by the Competition Commission for confirmation of a consent agreement concluded with Primedia (Pty) Ltd. The proceedings were not a contested hearing on the merits of the complaint, but a request that the Tribunal confirm the settlement agreement as an order of the Tribunal.


The procedural history reflected in the settlement documentation was that the Commission initiated a complaint in November 2011 under CC case number 2011Nov5779 against certain media owners and the Media Credit Co-ordinators (MCC). The complaint was later expanded in December 2015 (under 2015Dec0695) to include additional respondents. The consent agreement before the Tribunal related to Primedia’s alleged participation in the impugned conduct, and the Tribunal hearing on 27 February 2019 resulted in the Tribunal confirming the agreement on the same day under CT Case No. CR294Feb18/SA242Jan19.


The general subject-matter of the dispute concerned alleged price fixing and fixing of trading conditions in the market for the provision of advertising space and/or airtime, specifically through coordinated discount structures and payment terms offered to advertising agencies via an industry body (MCC) and associated accreditation and risk assessment mechanisms.


Material Facts


The material facts, as recorded in the consent agreement and relied upon for the Tribunal’s confirmation, were that the Commission’s investigation concerned arrangements among various media owners (including Primedia) acting through the MCC, in terms of which they offered similar discounts and payment terms to advertising agencies placing advertisements with MCC members.


A central factual feature was the distinction between accredited and non-accredited advertising agencies. For accredited agencies, the discount offered was recorded as 16.5% for payments made within 45 days of the statement date, while (for the most part) the discount offered to non-accredited agencies was 15% for payments made within the same period. The structure and uniformity of these discounts and terms were treated by the Commission as constituting an agreed element of price or trading conditions.


The consent agreement recorded that MCC members used an intermediary company, Corexalance Proprietary Limited (CoreX), to perform risk assessments on advertising agencies for purposes connected to the application of the settlement discount structure and associated terms.


On these facts, the Commission recorded its finding that the practices resulted in a restriction of competition because the participating firms did not independently determine an element of price in the form of discounts or trading terms. The conduct was characterised in the consent agreement as amounting to price fixing and fixing of trading conditions in contravention of section 4(1)(b)(i) of the Competition Act.


Primedia’s position was not recorded as a factual dispute in the consent agreement. Instead, Primedia admitted that it engaged in the practices set out in the agreement and that this conduct contravened section 4(1)(b)(i). The agreement further recorded that, insofar as the Commission was aware, Primedia had ceased engaging in the prohibited practice and had cooperated with the Commission’s investigation.


Legal Issues


The central legal question for the Tribunal in these proceedings was whether the consent agreement concluded between the Competition Commission and Primedia should be confirmed as an order of the Tribunal under section 49D, read with sections 58(1)(a)(iii) and 58(1)(b) of the Competition Act.


Although the consent agreement itself recorded the Commission’s characterisation of the underlying conduct as a contravention of section 4(1)(b)(i) (price fixing/fixing trading conditions), the Tribunal proceedings reflected in the order were primarily concerned with the application of statutory settlement provisions to an agreed set of terms, rather than resolution of disputed facts.


Accordingly, the dispute before the Tribunal (as reflected in the short order) was mainly one of application of law to an agreed settlement and the exercise of the Tribunal’s statutory power to make the settlement terms an order, rather than a contested factual adjudication.


Court’s Reasoning


The Tribunal’s reasoning, as reflected in the text provided, was confined to the confirmation of the settlement agreement. The Tribunal issued an order stating that it confirmed the settlement agreement as agreed to and proposed by the Competition Commission and Primedia, with the settlement agreement annexed and marked “A”.


The consent agreement recorded the statutory framework under which confirmation was sought, namely section 49D read with sections 58(1)(a)(iii) and 58(1)(b) of the Competition Act, and it set out agreed consequences including an administrative penalty, future conduct undertakings, and additional remedial measures directed at participation by qualifying small agencies and contributions to an economic development fund administered by the MDDA.


No further independent analysis, evaluation of evidence, or detailed merits reasoning was set out in the Tribunal’s order in the provided text. The Tribunal’s disposition therefore reflected acceptance of the settlement mechanism and confirmation of agreed terms, rather than findings following contested argument.


Outcome and Relief


The Tribunal confirmed the settlement (consent) agreement between the Competition Commission and Primedia (Pty) Ltd as an order of the Tribunal on 27 February 2019.


As confirmed, the order gave effect to the agreed relief, including Primedia’s undertaking to pay an administrative penalty of R9 605 884.64 within 30 days of confirmation, and additional agreed obligations concerning cooperation, competition-law compliance measures, and remedial commitments relating to qualifying small agencies and contributions to an economic development fund. The provided text did not record any separate or additional costs order.


Cases Cited


No cases were cited in the provided judgment text.


Legislation Cited


Competition Act 89 of 1998 (as amended).


Broad-Based Black Economic Empowerment Act 53 of 2003 (as amended).


Media Development and Diversity Agency Act 14 of 2002 (as amended).


Rules of Court Cited


No rules of court were cited in the provided judgment text.


Held


The Competition Tribunal confirmed, as an order of the Tribunal, the consent agreement concluded between the Competition Commission and Primedia (Pty) Ltd in terms of section 49D read with sections 58(1)(a)(iii) and 58(1)(b) of the Competition Act.


The confirmed settlement recorded Primedia’s admission that it engaged in conduct described in the agreement that contravened section 4(1)(b)(i) of the Competition Act, and it imposed the agreed consequences, including payment of an administrative penalty and performance of specified remedial and compliance undertakings.


LEGAL PRINCIPLES


The Tribunal documentation reflected the application of the statutory mechanism permitting settlement of competition proceedings by way of a consent agreement, and the Tribunal’s power to confirm such an agreement as an order under section 49D read with sections 58(1)(a)(iii) and 58(1)(b) of the Competition Act 89 of 1998 (as amended).


The consent agreement proceeded on the basis (as recorded by the Commission and admitted by Primedia) that coordinated or agreed discounts and payment terms offered to customers (advertising agencies), where not independently determined by competitors, may constitute price fixing and/or fixing of trading conditions falling within the prohibition in section 4(1)(b)(i) of the Competition Act.


The settlement further reflected that, upon confirmation, the Tribunal order may incorporate not only an administrative penalty contemplated by the Act (with reference in the agreement to sections 59(1)(a), 59(2), and 59(3)), but also agreed forward-looking behavioural commitments (including a competition law compliance programme and cooperation undertakings) and additional remedial measures forming part of full and final settlement between the Commission and the settling respondent.

SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this
document in compliance with the law and SAFLII Policy
COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA

Case No: CR294Feb18/SA242Jan19

In the matter between:

The Competition Commission Applicant

And

Primedia (Pty) Ltd Respondent

Panel: N Manoim (Presiding Member)
E Daniels (Tribunal Member)
M Mazwai (Tribunal Member)
Heard on 27 February 2019
Decided on 27 February 2019


Settlement Agreement


The Tribunal hereby confirms the settlement agreement as agreed to and proposed
by the Competition Commission and Primedia (Pty) Ltd annexed heret marked "A".


_____________________
Presiding Member an Manoim

27 February 2019

Date


Concurring: Mr Enver Daniels and Ms Mondo Mazwai




IN THE COMPETITION TRIBUNAL OF SOUTH AFRICA

CT Case No. CR294Feb18/SA242Jan19
CC Case No. 2011Nov5779,
2015Dec0695 & 20170ct0028

In the matter between:
THE COMPETITION COMMISSION APPLICANT

and

PRIMEDIA (PTY) LTD RESPONDENT


CONSENT AGREEMENT IN TERMS OF SECTION 49D AS READ WITH
SECTIONS 58(1)(a)(iii) AND 58(1}(b) OF THE COMPETITION ACT, NO. 89 OF
1998 (AS AMENDED), BETWEEN THE COMPETITION COMMISSION AND
PRIMEDIA (PTY) LTD IN RESPECT OF A CONTRAVENTION OF SECTION
4(1)(b)(i) OF THE COMPETITION ACT, NO. 89 OF 1998


The Competition Commission and Primedia (Pty) Ltd hereby agree that an
application be made to the Competition Tribunal for the confirmation of this Consent
Agreement as an order of the Tribunal in terms of Section 490 as read with Sections
58(1)(a)(iii) and 58(1)(b) of the Competition Act, No. 89 of 1998, as amended, in

respect of contraventions of section 4(1)(b)(i) of the Act, on the terms set out below.


1. DEFINITIONS
For the purposes of this consent agreement, the following definitions shall apply:
1.1 "Act" means the Competition Act, No. 89 of 1998, as amended;
1.2 "Accredited Media Agents'' means advertising agents endorsed by MCC
through Corex and have provided security to MCC. MCC holds securities for
its members {media owners) on behalf of an accredited media agency.
1.3 "Black People" bears the same meaning as that set out in section 1 of the
Broad Based Black Economic Empowerment Act 53 of 2003 as amended;
1.4 “Commission" means the Competition Commission of South Africa, a
statutory body established in terms of section 19 of the Act, with its principal
business address at 1st Floor, Mulayo Building (Block C), the DTI Campus, 77
Meintjies Street, Sunnyside, Pretoria, Gauteng;
1.5 "Commissioner" means the Commissioner of the Commission, appointed in
terms of section 22 of the Act;
1.6 "Complaint° means the complaint initiated by the Commissioner in terms of
section 498(1) of the Act under case numbers 2011Nov5779, 2015Dec0695
and 20170ct0028;
1.7 "Consent Agreement" means this Agreement duly signed and concluded
between the Commission and Primedia;
1.8 "CoreX" means Corexalance Proprietary Limited, a com pany duly
incorporated under the laws of the Republic of South Africa with its principal
place of business at Building A, Office 103, Cresta Junction, Cnr of Beyers
Naude and Judges Street, Cresta, Gauteng;
1.9 "Economic Development Fund" means the fund referred to in paragraph
7.2 below;
1.10 "Economic Development Fund Manage0r means Media
Development and Diversity Agency;
1.11 "MDDA" means Media Development and Diversity Agency, a juristic
person established in terms of section 2 of the Media Development and
Diversity Agency Act no 14 of 2002, as amended, with its principal place
business address at 1st Floor, 5 St Davids Place, Parktown, Johannesburg,

Gauteng;
1.12 "MCC" means the Media Credit Co ordinators, a non-profit company
duly incorporated under the laws of the Republic of South Africa with its
principal place of business at Building A, Office 103, Cresta Junction, Cnr of
Beyers Naude and Judges Street, Cresta, Gauteng;
1.13 "MCC Members" means media owners that have subscribed with
MCC and are active in the provision of advertising space;
1.14 "Primedia" means Primedia Proprietary Limited, a company duly
incorporated under the laws of the Republic of South Africa with its principal
place of business at Primedia Place, 6th Floor, 5 Gwen Lane, Sandown, 2196
and its subsidiaries and divisions, including Prime dia Broadcasting and
Primedia Outdoor;
1.15 "Qualifying Small Agencies" means those agencies which meet the
criteria set out in the Broad Based Black Economic Empowerment Act 53 of
2003 and the codes of good practice issued thereunder;
1.16 "Small Agencies" means media or media related agencies or
organisations with a turnover not exceeding R50 000 000 (fifty million rand)
and which are majority owned by Black People; and
1.17 "Tribunal" means the Competition Tribunal of South Africa, a statutory
body established in terms of section 26 of the Act, with its principal place of
business at 3rd Floor, Mulayo Building (Block C), the DTI Campus, 77
Meintjies Street, Sunnyside, Pretoria, Gauteng.

2. THE COMMISSION'S INVESTIGATION AND FINDINGS
2.1 In November 2011, the Commission initiated a complaint interms of section
49(8)(1) of the Act (under case number 2011Nov5779) against Avusa Media
Limited, Caxton Community Newspapers Limited, Independent Newspapers
Proprietary Limited, Media24 Limited, Radmark Proprietary Limited
(collectively, the "respondents") and MCC.
2.2 In December 2015 (under case number 2015Dec0695) the Commission
expanded the initial complaint to include 24 additional respondents.
2.3 The allegations against the respondents are that:
2.3.1 through the medium of the MCC, the respondents agreed to

2.3.1 through the medium of the MCC, the respondents agreed to
offer similar discounts and payment terms to advertising agencies that

place advertisements with MCC members. For accredited agencies,
the discount offered is 16.5% for all payments made within 45 days of
the date of the statement while for the most part the discount offered to
non-accredited agencies is 15% for payments made within the same
period.
2.3.2 The respondents as members of the MCC employ services of an
intermediary company called Corex to perform the risk assessments on
advertising agencies for purposes of imposing the above settlement
discount structure and terms on advertising agencies.
2.3.3 The Commission found that the above mentioned practices by
the respondents gave rise to a restriction of competition amongst
competing respondents in that they did not independently determine an
element of a price in the form of discount or trading terms. These
practices amount to price fixing and the fixing of trading conditions in
contraventions of section 4(1)(b)(i) of the Act.

3. ADMISSION OF LIABILITY
Primedia admits that it engaged in the practices set out in clause 2 above in
contravention of section 4(1)(b)(i) of the Act.

4. CO-OPERATION
Insofar as the Commission is aware, Primedia:
4.1 has provided the Commission with truthful and timely disclosure, including
information in its possession or under its control, relating to the prohibited
practice;
4.2 has provided full and expeditious co -operation to the Commission concerning
the prohibited practice;
4.3 has ceased to engage in the prohibited practice;
4.4 has not destroyed, falsified or concealed information, evidence and
documents relating to the prohibited practice; and
4.5 has not misrepresented or made a wilful or negligent misrepresentation
concerning the material facts of any prohibited practice or otherwise acted
dishonestly.

5. FUTURE CONDUCT
Primedia agrees and undertakes to:
5.1 provide the Commission with full and expeditious co-operation from the time
the Consent Agreement is concluded until the subsequent proceedings in the
Tribunal or the Competition Appeal Court are completed. This includes, but is
not limited to:
5.1.1 to the extent that it is in existence and has not yet been
provided, providing evidence, written or otherwise, which is in its
possession or under its control, concerning the contraventions in this
Consent Agreement; and availing its employees to testify a s witnesses
for the Commission in any cases regarding the contraventions
contained in this Consent Agreement;
5.1.2 prepare and circulate a statement summarising the content of
this agreement to its employees, managers and directors within 30
(thirty) days of th e date of confirmation of this Consent Agreement as
an order of the Tribunal;
5.1.3 refrain from engaging in conduct which contravenes section
4(1)(b) of the Act, and from engaging in any prohibited practice in
future;
5.1.4 develop, implement and monitor a competition law compliance
programme as part of its corporate governance policy, which is
designed to ensure that its employees, management, directors and
agents do not engage in future contraventions of the Act. In particular,
such compliance programme should include mechanisms for the
identification, prevention, detection and monitoring of any contravention
of the Act;
5.1.5 submit a copy of such compliance programme to the
Commission within 60 (sixty) days of the date of confirmation of the
Consent Agreement as an order by the Tribunal; and
5.1.6 actively endeavour to put in place measures to facilita te the
ability of Small Agencies to transact with Primedia, as set out in
paragraph 7 of this Consent Agreement.

6. ADMINISTRATIVE PENALTY

6.1. Having regard to the provisions of sections 58(1)(a)(iii) as read with
sections 59(1)(a), 59(2) and 59(3) of the Act, Primedia is liable to pay an
administrative penalty.
6.2. Primedia agrees and undertakes to pay an administrative penalty in the
amount of R9 605 884.64 (Nine Million Six Hundred and Five Thousand
Eight Hundred and Eighty -Four Rands and Sixty -Four Cents) which does
not exceed 10% (ten percent) of Primedia's annual turnover in the Republic of
South Africa for the financial year ended 2016.
6.3. The payment shall be made within 30 (thirty) days of the confirmation
of the Consent Agreement as an order of the Tribunal.
6.4. The administrative penalty shall be paid into the Commission's bank
account, details of which are as follows:
Name: The Competition Commission Fee Account
Bank: Absa Bank, Pretoria
Account Number: […]
Branch Code: 323 345
Ref: 2015Dec0695/Primedia
6.5. The administrative penalty will be paid over by the Commission to the
National Revenue Fund in accordance with section 59(4) of the Act.

7. OTHER REMEDIES
7.1. SMALL AGENCY PARTICIPATION
7.1.1 Further, Primedia undertakes to provide 25% {twenty five
percent) in bonus advertising space and/or airtime for every Rand of
advertising space and/or airtime bought by all Qualifying Small
Agencies. The bonus advertising space and/or airtime will be utilised at
times scheduled at the discretion of Primedia, which discretion shall be
reasonably exercised1 taking into account the advertising space and/or
airtime package purchased, the target audience and advertising
requirements of the clients of Qualifying Small Agencies. Primedia will
offer these terms for a period of 3 (three) years from the date of
confirmation of this Consent Agreement, subject to a total annual
advertising space and/or airtime cap of R 24 million.
7.1.2 Primedia undertakes to publish the terms in paragraph 7.1.1 of

the Consent Agreement using national media that has a reach to
Qualifying Small Agencies within 10 (ten) business days from the date
of confirmation of this Consent Agreement as an order of the Tribunal,
inviting all Qualifying Small Agencies to participate. Primedia will
thereafter publish these terms every year on the anniversary of the first
publication for a period of 3 (three) years.
7.1.3 Primedia undertakes to provide the Commission with a written
report in respect of the utilisation of the 25% bonus advertising space
and/or airtime by Qualifying Small Agencies. Such report shall include
information on the number of Qualifying Small Agencies who have
utilised the bonus advertising space and/or airtime, as well as the
names, contact details and the Rand value of the bonus advertising
space and/or airtime received by each Qualifying Small Agency.
7.1.4 Primedia shall submit such report 1 (one) month after every 6
(six) month period from the date of confirmation of this Consent
Agreemen1t for a period of 3 (three) years.
7.2 ECONOMIC DEVELOPMENT FUND
7.2.1 Primedia undertakes to contribute R3 458 118.47 (Three Million
Four Hundred and Fifty -Elght Thousand One Hundred and
Eighteen Rands and Forty -Seven Cents) over 3 (three) years from
the date of confirmation of this Consent Agreem ent to the Economic
Development Fund to enable the development of Qualifying
Beneficiaries.
7.2.2 Primedia undertakes to make 3 (three) equal contributions of
R1152 706.16 (One Million One Hundred and Fifty-Two Thousand
Seven Hundred and Six Rands and Sixteen Cents) into the
Economic Development Fund. The first contribution is payable within 3
(three) months from the date of confirmation of this Consent Agreement
and thereafter make the second and third contributions by the first and
second anniversary of the first contribution.
7.2.3 These contributions shall be made into an account created and
managed by MDDA, which account details are as follows:
Name: Media Development and Diversity Agency

Name: Media Development and Diversity Agency
Bank: Absa Bank

Account Number: […]
Branch Code: 632 005
Ref; 2015Dec0695/Primedia
7.2.4 The Qualifying Beneficiaries are Black People and include the
following:
7.2.4.1 students requiring bursaries to study media or advertising
qualifications at tertiary institutions;
7.2.4.2 individuals requiring assistance to acquire necessary
post­ qualifications experience to participate in the advertising
industry;
7.2.4.3 individuals requiring assistance with sponsorship for
mentoring or training in areas of media and/or advertising
business fundamentals including working capital management,
capitalisation and HR processes;
7.2.4.4 black owned small media or advertising agencies
requiring assistance with start-up capital;
7.2.5 The Economic Development Fund will be managed and
administered by MDDA and will be subject to annual audits by an
auditing firm. MDDA shall submit an audited report relating to the
management and administration of the activities of the Economic
Development Fund to the Commission within 3·months of the
completion of the audit.
7.2.6 In addition, the MDDA shall provide the Commission with a
written report in respect of the utilisation of the contributions made by
Primedia to the Economic Development Fund, including the number of
Qualifying Beneficiaries who derived benefits from such c ontributions,
as well as the names, contact details and the Rand value of the
benefits received by Qualifying Beneficiaries. Such report shall be
submitted every 6 (six) months for a period of 3 (three) years.
7.2.7 In accordance with clause 4.1 of the MDDA agreement, MDDA
shall publish the terms in paragraph 7.2 of this Consent Agreement
using national media that has a reach to Qualifying Beneficiaries within
3 (three) months from the date of confirmation of this Con sent
Agreement as an order of the Tribunal.

8. FULL AND FINAL SETTLEMENT
This agreement is entered into in full and final settlement of all conduct engaged in
by Primedia with its competitors as set out in paragraph 2 of this Consent Agreement
and, upon confirmation as an order by the Tribunal, concludes all proceedings
between the Commission and Primedia in this regard.

For Primedia (Pty) Ltd
Date and signed at Sandton on the 10 day of December 2018.


___________________
Name in full: G. Grays-Williams
Designation: CBO

For the Commission
Date and signed at Tshwane on the 21st day of January 2019

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