PRICE FIXING: DSTV FINED MILLIONS FOR PRICE COLLUSION

I T NEWS 

(Image Source: Multichoice)

CAPE TOWN – MultiChoice’s advertising sales business, DStv Media Sales, has been fined of R180m ($14 Million) by the Competition Tribunal for price fixing and manipulating trading conditions in contravention of the Competition Act.

Multichoice and the Competition Tribunal reached an agreement to pay off the cumulative fine over a specified period of time. The company agreed to pay an administrative penalty of R22 million, and will have to fork out R8 million over three years to the Economic Development Fun, to allow for the development of black-owned small media or advertising agencies.

In addition the company has also agreed to provide 25% in bonus airtime for every rand of airtime bought by qualifying small media agencies to help them participate in the market. This bonus airtime is subject to an annual cap of R50 million. This will be managed by the Media Development and Diversity Agency and audited annually.

The fine comes after a thorough investigation in November 2011 which revealed that various media companies including Multichoice, agreed to offer similar discounts and payment terms to advertising agencies that place advertisements with Media Credit Co-Ordinators (MCC) members.

MCC accredited agencies were offered a 16,5% discount for payments made within 45 days of the statement date, while non-members were offered 15%, the tribunal said in the statement.

Although Multichoice insists that DStv Media sales was simply complying with what is a long standing practice across the media industry in South Africa, The Competition Commission found that their practices “amounts to price fixing and the fixing of trading conditions in contravention of the Competition Act” as it restricts competitions competition in the market.

PHOTO: DStv Media Sales fined R180 million. (Image Source: Multichoice)

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