Primedia has once again fallen foul of competition law as it was announced on Thursday that Primedia Outdoor, a division of Primedia, was slapped with a R2.7 million penalty and has to give R1.3m free ad space to small, medium and micro enterprises (SMMEs).
It is not the firm’s first brush in with the competition authorities. In 2019 cash-strapped public broadcaster the SABC, Primedia and Ster-Kinekor agreed to pay millions of rand in penalties, bonus advertising and Economic Development Fund contributions in a settlements agreement with the Competition Commission.
The Competition Commission on Thursday said it welcomed the Competition Tribunal’s green light to a consent deal reached between the Commission and advertising company Primedia Outdoor.
The February 13 Tribunal order follows an investigation by the Commission.
It found that between September 2004 and March 2018 media firms, under the auspices of an industry association Out of Home Media South Africa (OHMSA), had entered into collusive agreements, which fixed prices and trading conditions in contravention of the Competition Act.
OHMSA members include: Boo! Media; Insight Outdoor; Outdoor Network; Adreach; Tractor Outdoor; SP Media; Primedia Outdoor; JB Media; Likhwane Media; Anchor Zedo; Jonet Outdoor; Airport Media and OHMSA.
In December 2018, the Commissioner initiated a complaint alleging that various media firms, under OHMSA, agreed to develop a code of practice and standards that fixed payment and settlement terms, penalties and cancellation fees that they impose on advertising agencies, advertisers and poster buying specialists that purchase advertising space from them.
The Commission explained, “At the conclusion of its investigation, the Commission referred the complaint to the Tribunal for adjudication. Primedia, one of the respondents in the matter, has settled with the Commission agreeing to pay an administrative penalty of R2 717 950.
“Primedia has also agreed to provide free out-of-home advertising services to small, medium and micro enterprises (SMMEs) owned by historically disadvantaged persons (HDPs) to the value of R1 358 975 over a period of 12 months.”
Commissioner Doris Tshepe said in the statement, “Primedia is the first respondent to settle with the Commission. The Commission is encouraging the remaining 12 respondents to settle the case against them.”
Background
The allegations against the respondents are that from around September 2004 to about March 2018, OHMSA issued the Code of Practice and Standards for its members recording the following arrangement between the respondents:
– Where a Out of Home Media campaign is cancelled by an advertiser or the advertising agency, a cancellation fee of 75% of the balance of the contract is payable to the media owner;
– Where illumination of a sign has been sub-standard for a month or part thereof, 25% of the monthly rental fee is to be credited to the customer;
– Where a client or advertising agency is responsible for the supply of material for display on or in Out of Home Media and such material is delivered later than the date agreed, the media owner will be entitled to charge for full period of exposure without any compensation for late flighting; and
– Where campaigns run for three months or less, a fee for removal offaces or blanking of boards will be levied.
“This conduct may amount to price fixing and/or fixing of trading conditions in contravention of section 4(1)(b)(i) of the Act,” the Commission said.
2019 brush with the law
Primedia, following the admission of price and trading fixing in contravention of the Competition Act, had to pay an administrative penalty of more than R9.6m and provide 25% bonus advertising space for every rand of advertising space bought by qualifying small agencies over a period of three years, capped at R24m annually.
The company at the time also had to contribute roughly R3.4m to the EDF over three years.
The case is related to an investigation initiated in November 2011, which found that, through the Media Credit Co-Ordinators (MCC), various media companies agreed to offer similar discounts and payment terms to advertising agencies that place advertisements with MCC members.
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