The first official clash in the local newspaper war took place last week when the Competition Tribunal had to rule in a cost application filed by Caxton, owners of amongst others the Vhembe Herald newspaper.

The conflict started in November last year when the Northern Media Group (NMG) launched a paper in opposition to the local independent newspaper, the Zoutpansberger. NMG is a subsidiary of Caxton and CTP Publishers and Printers Ltd, one of the biggest publishers of newspapers in the country. The local newspaper accused the opposition of predatory pricing strategies, arguing that the tariffs charged for advertising space were well below the average. The tariffs were roughly a third of that charged by NMG in similar markets in the province.

The South African Competition Law prohibits practices such as price discrimination and predatory pricing strategies. Any business or person, who feels that the competitive process is being threatened by these actions, can lay a charge with the Competition Commission. The Competition Commission will then investigate the charges and if the case is strong enough, refer it to the Competition Tribunal for a hearing. This process should finish within a year, but often it continues for longer.

Should a business feel that the conduct of a competitor will lead to immediate and irreparable harm, it can approach the Tribunal directly, asking for an immediate relief order. Zoutnet, the owners of the Zoutpansberger, pursued this avenue and requested the Tribunal to intervene. Halfway through the process, in March this year, Zoutnet decided to withdraw the application. Caxton and NMG subsequently demanded compensation for the legal costs incurred in defending the application. This request served before the Competition Tribunal last Wednesday (12th).

In the Tribunal hearing, Caxton’s legal team argued that the application should never have been filed and was without merits. The company asked the Tribunal to award them costs for two legal teams as well as the cost of bringing the application to the Tribunal. In the legal process it is common practice for applicants to tender legal costs, should they decide to withdraw an urgent application, such as Zoutnet did.

Zoutnet argued that there were special circumstances that influenced its decision to withdraw the application. Advocate Jacob Wessels, who acted on behalf of Zoutnet, told the Tribunal that the charges against NMG and Caxton are currently being investigated by the Commission and must be viewed in a serious light. The Commission indicated that it will in all probability take the matter to the Tribunal and combine it with similar charges laid by other newspapers.

Zoutnet argued that Caxton, by not making information available, made it very difficult to prove the allegations of predatory pricing. The Competition Commission, on the other hand, has much more power in terms of investigating alleged prohibited practices.

Advocate Wessels argued that the financial risk for a small company is enormous when standing up against a bigger competitor in the Tribunal. The risk became even more when the Competition Appeals Court (CAC) overturned an earlier decision by the Tribunal in the Sasol vs Nationwide Poles case. The Nationwide Poles case was the first in which a small business successfully used the Competition Law and the Tribunal to fight against price discrimination. The CAC, however, reversed this decision of the Tribunal and ruled that small businesses should not receive special protection by the law. The CAC’s ruling in the Nationwide Poles case only became known after Zoutnet filed its complaint.

The Tribunal ruled on the matter on Thursday (13th) and decided to award the cost of one legal representative to Caxton and NMG. No further cost order was made for bringing the matter to the Tribunal.