Johannesburg - Senior counsel for Media24, which is accused of anti-competitive behaviour, pushed the Competition Commission’s expert witness to concede Vista and not Goudveld Forum was Gold-Net News’ closest competitor.
The commission alleges that Goudveld Forum was a “fighting brand” engaged in predatory pricing against Gold-Net. By pricing its advertising rates below cost, Goudveld Forum allegedly made it difficult for Gold-Net to operate in the northwest Free State between 2004 and 2009. Gold-Net closed down in April 2009.
Goudveld Forum is alleged to have been run at a loss to sink Gold-Net. It was closed in 2010 once Gold-Net had gone under. Media24, a subsidiary of JSE-listed media conglomerate Naspers, has denied the claims. It owned Vista and Goudveld Forum.
David Unterhalter, Media24’s senior counsel, in his arguments aimed to prove that Vista was the true competitor to Gold-Net and not Goudveld Forum. He noted that when Gold-Net began losing advertisers they migrated to Vista and not Goudveld Forum. “There is no suggestion that Vista was engaging in predatory pricing.”
Cases alleging below-cost pricing are rare in competition matters and this is the first such case to be referred to the tribunal, by the commission, in its 14-year history.
Simon Roberts, the commission’s expert witness and its former chief economist, argued that while Vista was Gold-Net’s nearest competitor, other factors caused by Goudveld Forum had an impact on Gold-Net.
“What you are saying, Dr Roberts, is that Forum and Vista’s prices were too low for Gold-Net to successfully compete,” Unterhalter said.
Roberts replied: “Yes”.
Earlier this week, Hans Steyl, the former owner of Gold-Net, testified: “We felt we were up against the wall, increasingly so from 2005 onwards, and the story I’ve heard almost on a daily basis is we can’t match Vista’s rates. It was below our [rates].”
Roberts said in his witness statement: “It is clear that advertisers in particular viewed the newspaper as a viable alternative to Forum and Vista in the region and it competed strongly with the two titles for advertising revenue, especially for local advertisers.
“It is highly unlikely that a major, probably from one such as Media24, would have gone to such great lengths to undermine a competing title if it did not perceive it as being an effective competition in the market.”
Gold-Net managed to gain a significant market share at the expense of Media24 titles in the Goldfields region. In 2005, Gold-Net had a market share by circulation of 62 percent. This dropped to 37 percent by 2009. Goudveld Forum’s market share increased from 12 percent to 22 percent. Vista lost market share from 46 percent to 41 percent. In revenue, Gold-Net’s market share dropped from 28 percent in 2005 to 22 percent by 2009. Goudveld Forum’s market share fluctuated between 10 percent and 11 percent. Vista’s market share grew from 62 percent to 68 percent.
The population of the Goldfields region rose from 120 000 in 2001 to 123 000 in 2011. - Business Report