SA Competition Commission issues report on the online platforms market

The Competition Commission of South Africa issued its provisional report into the online platforms market on 13 July after a 14-month inquiry, setting out its proposed steps to regulate business practice in the digital space for public consultation.

The inquiry focused on online intermediation platforms facilitating eCommerce, app stores, travel and accommodation, food delivery and online classified advertisements, and sought to identify market features that have adverse effects on competition – both amongst the various platforms, as well as between businesses using these platforms.

The inquiry concentrated on ‘leading platforms’ that received the most consumer traffic, covering a number of household names such as Takealot, Property24 and Mr Delivery, as well as international players such as the Apple and Google App stores, Uber Eats and Google Search.

The report’s proposals look to address those concerns identified across the various categories of platforms, through a number of proposed remedies that would be imposed only on the identified ‘leading platforms’, including:

• Lack of transparency over ‘pay-for-position’ rankings – to be addressed with stricter rules on how and where paid results can be displayed and ranked.
• Exploitative and discriminatory fees that exclude smaller businesses that cannot match the spend of larger players – to be addressed with fee caps and standard rate cards.
• Asymmetric business terms that enable the platform to be paid ahead of the business user – to be addressed by allowing customers to pay the business directly rather than through the platform.
• Platform exclusivity restricting direct sales or use of other channels – to be addressed by allowing this only via the supplier rather than the platform.
• Self-preferencing conduct – to be addressed by separating retail operations from operation of the marketplace, fair access to data, removal of ‘algorithm bias’ and other measures to ensure equal treatment of users.
• Inadequate app store competition, sideloading restrictions and a lack of discoverability of South African apps – to be addressed by regulation of commission fees, curation and improved visibility of local apps.

The inquiry also considered the extent to which small and medium enterprises (SMEs) and historically disadvantaged persons (HDPs) – “non-white South Africans and firms that are majority-owned and controlled by them” ¬– can participate and compete in the digital economy.

The report found there were significant challenges in funding and support for HDPs and recommended that private investors and government funding channels specifically commit to HDP mandates. It also recommended that all leading platforms provide HDP businesses with personalised onboarding, waiving of onboarding costs and fees, free promotional credits, fees that do not exceed the best placed users and opportunities for consumers to discover HDP businesses on the relevant platform.