Commercial Law Index

The case is an appeal by Media 24 Property Ltd which owns Forum and Vista community newspapers distributed in Welkom town against a decision of the Competition Commission Tribunal (the tribunal) which found that the selling of Forum newspaper in Welkom was predatory in contravention of s 8(c) of the Competition Act (the act). The tribunal ruled that the Forum newspaper was priced below the average cost to the detriment of other newspapers. In order to reach its decision, the tribunal employed the Average Total Cost concept (ATC).

On appeal, the appellant was challenging the use of the ATC concept as an appropriate benchmark for determining predatory pricing under the act. The court held that there are two tests for determining predatory pricing under s 8(d)(iv) being the benchmark of marginal cost and the Average Value Cost (AVC). It ruled that in order for the respondent (the commission) to show that the conduct of the appellant was predatory in nature, it needed to establish that the appellant is the dominant firm involved in selling goods below the marginal or (AVC). The court found that the ATC standard cannot be used to measure predatory pricing. It ruled that the Average Avoidable Cost (AAC) was the appropriate cost benchmark to determine predatory pricing. In light of evidence provided by the parties, the court found that the respondent failed to prove that Forum’s AAC exceeded its revenue hence the appeal was upheld.