South Africa’s Competition Commission will hold public hearings in November as part of its Online Intermediation Platforms Market Inquiry.
In response to the growing importance of the online economy and competition concerns in these markets emerging in other countries, the Competition Commission launched a probe into competition and participation in the online economy earlier this year.
“Since the advent of the pandemic, South African consumers and businesses have embraced online channels for shopping, food delivery, booking travel accommodation, research before big purchases like cars or homes and downloading apps for almost every aspect of digital life,” the commission said.
“The purpose was to ensure that consumers and businesses that use online platforms to reach consumers benefit from competition amongst online platforms, and that small and historically disadvantaged business also get to participate fairly in the online economy,” it said.
Some of the key participants scheduled to participate in the November hearings include:
- Famous Brands;
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 commission said that it has already identified a number of key issues, including:
- The extensive and growing use of sponsored ranking (i.e. payments to appear higher up on consumer search results), and its impact on consumer choice and the discoverability of small or historically disadvantaged businesses on these platforms;
- The rationale for, and impact of, higher commissions and listing fees charged to small restaurants, auto dealers and estate agents relative to larger national chains on food delivery platforms and online classifieds;
- The necessity for businesses to discount or offer promotions on the platforms in order to get consumer visibility, and the pressure from platforms to do so;
- The fairness of platform terms and conditions, including payment terms, liability for loss and termination on the platform;
- The general lack of platform initiatives to support the transformation of the online economy and the increased involvement by South African businesses on global platforms;
- The rationale for, and impact of, price-parity clauses imposed on businesses in eCommerce, delivery and travel and accommodation platforms;
- The impact of massive search engine marketing and consumer promotions by leading platforms on the ability of emerging platforms and individual businesses to get consumer visibility online;
- The reticence of prominent brands or larger business chains to support emerging platforms and the impact of this on consumer adoption and platform growth.
“These issues as well as the general functioning of the online economy will be the subject of virtual public hearings from 2-19 November this year,” the commission said.
Public hearings provide an opportunity for the Inquiry Panel to engage directly with stakeholders in respect of their submissions around how these platform markets operate, the issues identified by the Inquiry to date and any remedial actions stakeholders consider are necessary to address any issues identified, it said.
“The public nature of these engagements is important in ensuring a fair and transparent process, where the public is properly informed of the issues and debates before the inquiry panel.
“The inquiry and the public will benefit enormously from these engagements. The Inquiry is disappointed that a small minority of global platforms have elected not to participate in the public hearings despite their material presence in the country.”