Home » The Competition Commission’s price fixing infringement settlement with Corpcom raises critical questions and concerns

The Competition Commission’s price fixing infringement settlement with Corpcom raises critical questions and concerns

by Media Xpose

The Competition Commission (Commission) announced on Thursday 18 November 2022 that media firm Corpcom Outdoor (Pty) Ltd (Corpcom), which was subsequently bought by JCDecaux, has been ordered by the Competition Tribunal (Tribunal) to pay a penalty of R1.38 million, plus R500 198 to the Economic Development Fund, as a settlement related to the price fixing finding against it. Given that the membership of the Black Agencies Network Association (BANA) includes Black-owned out-of-home (OOH) media owners and media agencies, we find it relevant to give an opinion on this matter.

Following an investigation since 2011, the Commission found that Corpcom, among other companies in the Marketing, Advertising and Communications (MAC) industry, engaged in practices that include, among others, agreements to offer similar discounts and payment terms to advertising agencies that place advertisements with Media Credit Co-ordinators (MCC) accredited members, whereas non-accredited advertising agencies received smaller discounts.

This ruling and settlement agreement serves as a deterrent to such practices, but also raises at least three critical questions and concerns: Why did it take so long to settle this case – 11 years? Is the Commission making a material difference in the MAC industry by ordering such settlement agreements through the Tribunal? How should the Commission tackle anti-competitive behaviour going forward?

Pertaining to the first question, the transformation aims of the Commission are captured in its mission to “play a role in ensuring a vibrant economy and economic growth”; to undertake “competition regulation for a growing and inclusive economy”; which “entails adopting a dynamic view to enforcement, considering both immediate and long-term implications of the Commission’s decisions on the economy.” As such, the mission is partly achieved through punitive measures against (often large and previously advantaged) delinquent companies, and that should serve as a deterrent against anti-competitive behaviours. However, these measures are thwarted if it takes so long to conclude cases that go against these transformation ideals. This state of affairs brings to mind the cautionary proverb, “justice delayed, is justice denied.” 

The second question addresses the efficacy of the Commission’s approach to price fixing, by way of punitive measures and settlement agreements, within the context of the MAC sector. There are material and real time financial implications for a protracted investigative process. The penalty of R1.38 million for a price fixing case that took 11 years to conclude has lost close to 40% of its value by now, calculated at an average of 4.5% annual inflation over the same period. Clearly then, the financial impact of the punitive measure is lost!

If one considers that the Black Billboard Owners Alliance (BBOA) reports on their website that their members get only a tiny slice of the OOH business, estimated at R1.452 billion in 2019, it is apparent that systemic collusion has real time financial implications. As a result, the BBOA declares that it aims “to fight and change the status quo and inequalities regarding OOH Media in South Africa for our generation and the next.”

This is not a fight to gain privileges in the industry, but to secure the bare minimum for historically disadvantaged sections of the population and equity all-round. For example, an article published in the Mail & Guardian in 2019, titled, “Who runs SA’s media is a black-and-white issue”, claims that: “The media is not unlike many companies in the country; it’s run mostly by white people. An analysis of ownership structures, demographics and funding models shows that the boards of media houses comprise 41% white, 24% African, 17% coloured, 16% Indian and 2% of people from elsewhere.” These are empirical facts that cannot be denied and should not be evaded if substantive economic equality is to be achieved.

It is our view that this anti-competitive behaviour is continuing in the MAC industry in this day and age, taking different shapes and forms, as attempts are made to operate within the letter of the transformation laws, but certainly not in the spirit of these laws! Here are two examples of such practices that BANA plans to request the Commission to investigate in the near future:

  • The existing advertising and media groups in the MAC industry are basically set up to “keep it in the family”, by ensuring that lucrative accounts are circulated among companies that are part of such groups. 
  • The second example involves attainment of favourable BBBEE scores by some of the MAC agencies, assisted by consultants to circumvent the country’s transformation laws, without much meaningful change in the ownership structures.

The final question seeks a proactive way forward in terms of how the Commission could tackle anti-competitive behaviour. The way the world-renowned Truth and Reconciliation Commission (TRC), launched in 1995, was conducted, involved both the perpetrators of heinous racially motivated crimes and the victims. We are aware that there are all sorts of ongoing debates about the TRC’s outcomes and the effectiveness of associated restitutional modalities. That debate falls out of the scope of the issue at hand. Rather, we believe that Black-owned companies, which are most affected by anti-transformation behaviours in the South African economy, must be involved when such cases are investigated by the Commission and prosecuted by the Tribunal.

This is in order to provide insight and evidence of the real-life impact of such practices that exact a heavy cost on society, as a result of the skewed economic activities, borne out of this wayward behaviour. It only makes sense that the victims must be involved as part of the investigations and prosecutions. In the context of the MAC industry, BANA and BBOA are ready and willing to represent their constituencies if invited to participate in the relevant proceedings.

Yes, we know that the Commission will not launch any investigations without a complaint being lodged by a player in a said economic sector, or a member of the public. However, it must not end there. The adversely affected group of players in the relevant industry must be invited to give evidence, to give impetus to the investigations, and to assist in determining appropriate punitive measures. There is no doubt in our minds that the adversely affected businesses will generally be Black-owned, in many of the investigated cases. This particular case of the anti-transformation behaviour by  a segment of the OOH industry is a classic example. 

Bra Willy Seyama – BANA Founding Member

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