Expert testimony in seminal media predatory pricing case
Expert economic testimony in South Africa's seminal predatory pricing case
Communications and Media
Area of Expertise:
Abuse of dominance and prohibited practices
2011 - 2019
Genesis was retained by Media24, a large newspaper and magazine publisher, to defend predatory pricing allegations made against the group by the Competition Commission in what has proven to be South Africa’s seminal predation case.
Predatory pricing generally refers to a strategy where a company prices its products at a low level in the short term to exclude rivals from the market, and then raises its prices in the medium to long term to recoup profits.
In South Africa, section 8(d)(iv) of the Competition Act (No. 89 of 1998) explicitly outlaws predatory pricing. The act also allows for claims of such conduct to be assessed using the general exclusionary clause outlined in section 8(c).
The commission was acting on a complaint by Gold-Net News, a former community newspaper published in the Free State goldfields region. Gold-Net News alleged that Forum, one of Media24’s publications in that region, had been used as a “fighting brand” and its adverts priced below the production cost of the newspaper from 2004 to 2009 in order to exclude Gold-Net News from the market.
On behalf of the complainant, the commission further alleged that upon Gold-Net News’s exit from the market in 2009, the Forum title was withdrawn and a sister publication, Vista, was left to profit from its resulting market position.
Our work encompassed detailed financial analysis of Media24’s management accounts in conjunction with careful analysis of the economic evidence. As the case unfolded, the expert analysis by the Genesis team traversed a number of important economic issues before the tribunal. These are likely to assist in bringing greater legal certainty in future cases.
Genesis’s involvement in the case spanned the course of the entire matter – the investigation phase; the complaint hearing before the Competition Tribunal; and the subsequent appeals to, first, the Competition Appeal Court (CAC) and, finally, to the Constitutional Court.
The matter ultimately came to an end in July 2019 following the Constitutional Court’s decision to deny the Commission leave to appeal the CAC’s March 2018 judgment, holding that the decision of the CAC should stand.
The CAC – in a unanimous decision – ruled that the test put forward by the tribunal of pricing below ATC with predatory intent had no application under the act. The court set aside the decision of the tribunal, dismissed the Commission’s original complaint dating back to 2011, and gave a cost order against the Commission for the appeal proceedings.
This ruling, in which Genesis played a crucial role, sets important case precedent for the prosecution of predatory pricing practices in South Africa and provides businesspeople with greater certainty in relation to their commercial activities.
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