The Competition Commission (CompCom) has officially commenced with its investigation into online platforms in SA, to help promote fair competition and combat alleged manipulation and exploitation in the e-commerce sector.
According to the CompCom, the market inquiry will be initiated in terms of section 43B(1)(a) of the Competition Act 89 of 1998 (as amended), given that the commission has reason to believe there exist market features which impede, distort or restrict competition among the platforms, and which undermine the purposes of the Act.
While the scope of digital platforms is extremely wide, the inquiry seeks to focus on digital platforms which intermediate online transactions between business and consumers, and will cover e-commerce players, infrastructure developers, fintech players and payment platforms.
Speaking at the virtual launch of the inquiry this morning, competition commissioner Tembinkosi Bonakele explained it takes place at a time when online businesses have become increasingly important, as a driver of economic growth in SA and the rest of the world.
“The commission has implemented this market inquiry because there are reasons to believe there are market features, or a combination of features, which impede or restrict competition among online platforms, and these may undermine the purpose of the Competition Act.
“This assessment was made based on, among other things, several complaints lodged with the commission alleging anti-competitive conduct against several online platforms,” explained Bonakele.
The inquiry will play a key role in the implementation of the Competition Policy, which will be published today as announced by trade, industry and competition minister Ebrahim Patel in his Budget Vote 2021 speech yesterday, noted Bonakele.
The inquiry will be led by James Hodge,chief economist at the CompCom andformer managing partner at Genesis Analytics, in the Competition and Regulatory Economics practice.
The 18-month inquiry will entail public hearings, written submissions from stakeholders and members of the public, further information requests and/or questions of clarity from issues arising in the public hearings. There will also be several rounds of stakeholder questionnaires.
The CompCom published an initial paper for public comment at the end of last year. It noted the local industry is becoming concentrated rapidly, and there are many tactics and exploitation methods used to ensure dominance by market leaders.
In the paper, it highlights concerns that conglomeration may be used to gain an unfair advantage over rivals, including the conglomeration of consumer data across numerous online platforms and cross-promotion on those platforms.
“For instance, Takealot, as the largest e-commerce platform with a large marketplace, faces this potential conflict of interest by selling products, and also offering a marketplace as a platform for other businesses to offer products.
“In the property sector, Property24 is the dominant platform, and in food delivery services there are two clear leaders – UberEats and Mr D − and Travelstart dominates the travel aggregation industry,” notes the commission’s terms of reference document.
Bonakele also pointed out that several governments across the globe have introduced similar inquiries and regulations, including in the UK, EU, US, France, Germany and some BRICS countries.
“There is recognition that normal enforcement tools may be inadequate on their own to address any potential competition distortions observed and this has prompted a strong response from competition authorities from around the world, resulting in the introduction of new regulations to promote contestability and prevent exploitation of both businesses and consumers.”
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