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R1.8m fine imposed on billboard cartel

R1.8m fine imposed on billboard cartel

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Johannesburg – For a big company making in the region of R40 million in profit a month, a R1.8m fine is a slap on the wrist, says Tshepo Matsepe, convenor at the Black Billboard Owners Alliance (BBOA).

Matsepe was reacting to news that the Competition Commission Tribunal imposed the said fine on Corpcom after the company admitted to price fixing in the culmination of an investigation launched by the commission in 2011.

As part of the settlement, Corpcom will also pay R500 198 towards the Economic Development Fund.

But BBOA is seeing red, adamant that the ruling will not address historical wrongs and is not a deterrent for future anti-competitive behaviour by these big white firms.

The billboard industry is still largely white and Matsepe says JCDecaux is making a killing in the business.

“About 70% of their billboards are on municipal land and they do not pay levies.

“If you take the matter up with Salga (SA Local Government Association), you still come up against a brick wall.”

He insists that the ruling is not hard enough as it does not expressly warn the offending company against any such acts in the future.

“This is not the first such ruling.

“There’s one, for example, from 2014, involving about R40m-R60m.

“These guys are big.

“They will pay the fines easily and move on to do the same thing.”

These firms belong to the Media Credit Co-ordinators (MCC) through which they have control of the accounts coming from clients.

The commission found that MCC agreed to offer discounts and easy payment terms to advertising agencies placing ads with them.

Those like the embers of BBOA are on the fringes and do not get a slice of this advertising pie.

The commission found that accredited advertising agencies were offered a 16.5% discount for all payments within 45 days from the date of the statement whereas non-accredited advertising agencies were only offered a 15% discount.

The firms also agreed to employ an intermediary firm, Corexalance (Pty) Ltd, to perform risk assessments on advertising agencies for purposes of imposing the settlement discount structure and terms on advertising agencies.

The commission is said to have found that the above-mentioned practices restricted competition among competing companies as they did not independently determine an element of price in the form of discount or trading terms.

The commission concluded that this amounted to price fixing and the fixing of trading conditions, in contravention of Section 4(1)(b)(i) of the Competition Act.

During its investigation, the commission reportedly found that Corpcom engaged in price-fixing practices before it became a member of the JCDecaux group.

Although JCDecaux was not involved in the above-mentioned practices it has agreed on behalf of Corpcom to among others, provide 25% in bonus advertising space on roadside digital or static advertising inventory to qualifying small agencies for three years.

Although the BBOA has hailed the ruling as encouraging, it is of the view that “these are the methods used by white media owners who are refusing to open the industry to black participants”.

Neo Molefi says: “The cartel behaviour is rife in the outdoor advertising industry, and those companies who want to cement themselves offer each other discounts, fix prices and issue evergreen contracts.

“That is the reason BBOA was formed in 2019 – to address the anti-competitive actions of the large white media owners which are exclusionary.

“Our objective is to level the playing fields.”

Molefi adds: “We advocate for the growth and development of the black billboard owner and we stand for inclusivity.

“We must be diverse and extensive to access the market and our clients.”

The BBOA is against such anti-competitive behaviour and is hoping government regulation would make adherence even stricter.

Matsepe points out, however, that the fines imposed do not go to smaller companies as the ruling suggests.

The punitive fees go to the coffers of the Media Development and Diversity Agency (MDDA) which has its mandate for distributing the funds.

“They will, for example, take 10 students to school, who, after completion, go back to work for these companies.

“The money would have been better used if it went to black companies, who are already in the business and are in a position to compete with these giants.

“But, no, the money does not go to the complainant.

Matsepe’s company has been in the industry for 20 years now, he says.

The billboard business is a R48 billion a year industry.

Sunday Independent

Original Article

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