In what is considered to be a serious blow to small independent newspapers, the Competition Commission this week announced its decision not to refer a complaint against Caxton & CTP Limited to the Competition Tribunal.

This ends a chapter in an almost 18-month battle between one of the biggest publishers of newspapers in the country and a small independent publisher in the Limpopo Province.

In December 2005, Zoutnet Publishers lodged a complaint at the Competition Commission, alleging that Caxton engaged in predatory pricing strategies when launching the Vhembe Herald in the Louis Trichardt area. Zoutnet, who publishes the Zoutpansberger and Limpopo Mirror, argued that the prices charged for advertising space were totally out of line and below average variable cost.

After several months of investigations, the Competition Commission decided not to continue with the case. The Commission stated that the behaviour of Caxton by offering such low prices must be viewed as pro-competitive and was merely an attempt to attract customers away from the Zoutnet Group. "Competition in itself consists of inducement," says Ms Michelle Morgan, a legal analyst of the commission.

The Zoutnet group now has the opportunity to approach the Tribunal directly and ask that the matter be heard. This, however, is an unlikely scenario, given the track record of small businesses in the Competition Tribunal. "The financial risks for a small businesses to do this are simply too much," says Anton van Zyl, manager of the Zoutnet Group.

Although the Competition Act makes provision for the protection of small and medium-sized businesses, this has rarely been the case. "One cannot blame the Competition Commission for this," says Anton. "They function within the limitations of the interpretation of the law in the country. This often means that they have to look at the pure competitive effect of pricing strategies. Simply put – the cheaper the prices, the better for the consumer."

According to Anton, this does not help towards creating a more diverse economy; neither does it allow all residents an equitable opportunity to participate in the economy. "The media industry is a good example of this. For many decades, this industry has been dominated by a few big companies. It would, however, be unfair to expect the Competition Commission to extend their mandate to try and protect media diversity," he says.

Anton mentions that the road ahead is probably to lobby at industry level for changes in the legislation. "It does not mean that the rules of the game should change. Competition Law in South Africa is relatively new and it needs to adapt to protect the rights of all the country’s citizens effectively. Until such time, small businesses must just work much harder in order to survive the onslaughts of big conglomerates."