Johannesburg - The Competition Commission has brought a case against Media24 for allegedly deliberately pushing a competitor out of the community newspaper advertising market, the Competitions Tribunal said on Thursday.
The case centres on a complaint brought by the commission that Media24, between 2004 and 2009, deliberately drove competitor Gold-Net News out of the community newspaper advertising market.
The commission alleges that Media24 did this by positioning a competing community newspaper called Goudveld Forum in opposition to Gold-Net News, and ran the newspaper at a loss until Gold-Net News closed down in 2009.
After Gold-Net News's closure, the commission alleges Media24 closed down Goudveld Forum, and either retrenched its staff or redeployed them to other Media24 publications.
One of those publications included Vista, which operated in the same geographic area as Gold-Net News and Goudveld Forum.
Media24 has denied the commission's allegations, stating that Goudveld Forum covered its costs between 2004 and 2009.
The company also said there was no truth to Goudveld Forum being kept open so it could deter competition against Vista.
Media24 also denied that Gold-Net News closed down due to anti-competitive strategies on Media24's part, citing the 2008
economic downturn and other possible reasons for Gold-Net News's decline and subsequent closure.
The complaint arose after Berkina Twintig, trading as Gold-Net News, filed a case against Media24 with the Competition Commission in 2009.
Gold-Net News claimed that from 2004 to 2009, Media24 drastically reduced its advertising rates below its production and overhead costs, leading to Gold-Net News reducing its advertising rates to unsustainable levels.
Following an investigation, the commission believed such conduct to be in contravention of the Competition Act, which prohibited dominant firms from unjustifiably setting prices below cost.
The conduct allegedly took place in what the commission termed the Goldfields area.
The Goldfields area comprised the towns of Welkom, Odendaalsrus, Allanridge, Riebeeckstad, Virginia, Henneman, Bronville, Jerusalem, Wesselbron, Bultfontein, Theunissen, Ventersburg, Thabong, Meloding, Kutluanong, and Phomolong.
According to the commission, Media24's conduct resulted in both advertisers and readers being deprived of the benefit of competition between community newspapers.
The tribunal's hearing was set to take place between November 4 and 29.
Ten witnesses were expected to testify on behalf of Media24, and seven for the commission.
Below-cost pricing cases were rare, with the case against Media24 being the first such instance brought by the commission to the Competition Tribunal in its 14-year history. - Sapa