The Competition Commission will shortly launch its Online Intermediation Platforms Market Inquiry.
The commission said that the inquiry covers online markets that facilitate transactions between businesses and consumers for the sale of goods, services and software.
Online intermediation platforms include eCommerce marketplaces, online classified marketplaces, software application stores and intermediated services such as accommodation, travel, transport and food delivery, it said.
The commission has previously highlighted the following companies which are a possible cause for concern:
- In e-commerce, Takealot (including Superbalist) is substantially larger than other online platforms and operates a marketplace on which many business users are now dependent as a route to market.
- In most service delivery platforms there are one or two dominant providers. For instance, in food delivery Mr D and UberEats account for the bulk of trade whilst Airbnb has been the market leader in home-sharing accommodation. In travel aggregation, TravelStart has emerged as the leading provider.
- In online classifieds, there are typically two platforms that dominate sales leads and market revenue. For instance, Autotrader and Cars.co.za in autos or Property24 and Private Property in house listings.
- In software app stores, the dominance of the Android operating system in mobile phones gives Google Play a particularly dominant position, but equally the Apple App store is the only option for iPhone users.
The purpose of the inquiry
“Online markets have become an increasingly important channel for businesses to reach consumers, a trend which has accelerated under the Covid-19 pandemic and which is likely to continue,” the commission said.
“Online markets provide consumers with the convenience of comparing a wide range of options and then safely purchasing online. For businesses, the online markets offer a ready-made infrastructure to sell online and a means to reach an enormous number of consumers nationally and internationally”
The commission added that the shift to online commerce also means that it is increasingly important for South African businesses to participate actively in these markets if they are to be part of the global and national economy.
However, global experience is that a few platforms may start to dominate online commerce given the features of online markets and in some cases the conduct of the markets themselves, it said.
“In those circumstances, businesses using the markets may be exploited or discriminated against and consumers may not be presented with the optimal choices.”
“For this reason, the Inquiry is a proactive measure for the Commission to get a greater understanding of the online markets operating in South Africa and whether there are factors which may be hindering competition or undermining the public interest.
“This will ensure that these markets remain contestable and competitive, which is in the long-term best interests of South African consumers and businesses that depend on them.”
The commission said that the inquiry is broadly focused on three areas of competition and public interest:
- Market features that may hinder competition amongst the online markets themselves;
- Market features that may give rise to discriminatory or exploitative treatment of business users;
- Marker features that may negatively impact on the participation of SMEs and firms owned and controlled by historically disadvantaged persons.