EFSA Prepares Response to the SA Competition Commission’s Paper on Competition in the Digital Economy

The Competition Commission issued a discussion paper on 7 September and invited comments. The paper is very broad in its scope, covering ecommerce, fintech, banking, on-demand entertainment, telecommunications services among other aspects of the digital economy. The Commission points out that until the recent MIH/WeBuyCars merger was refused, all 87 previous mergers related to the digital economy had been approved (5 had attracted public interest requirements), however, the MIH/WeBuyCars merger had been refused on the basis that MIH (a subsidiary of Naspers) had access to other car-buying services which raised the probability of the creation of a dominant position in that market. The Commission also noted that Naspers dominates the ecommerce sector in SA through its ownership of Takealot and OLX. The Paper therefore proposes new rules on mergers/acquisitions of digital economy players, including smaller businesses, and promises to concentrate on the digital economy in the future. The deadline for providing views on the Paper at the time of writing is 5 October.

The EFSA Legal and Regulatory Committee in its draft reply, welcomes a balanced approach towards competition in our sector, but warns that (1) competition policy must look holistically at the markets which are being innovated by the digital economy, and competition rules should be used to prevent established companies using their muscle to prevent developments (for example in the telecommunications or banking businesses); (2) new innovations should not necessarily be compared like-for-like with existing services (for example, on-demand entertainment services should not have to apply the “must carry” rules applied to traditional TV broadcasters); (3) the Paper recognises that competition policy can be protectionist, EFSA warns that trade protectionism has no place in the African Free Trade Area (AfCFTA), and long-term will reduce SA’s efforts to revive its economy: (4) The Paper points out that international competition cases are being used to challenge the BigTech companies (such as Google, FB, Microsoft, etc). There are, for example, two new cases of relevance, one by the EU against Apple and the other by the USA against Google’s dominance in the search engine market. EFSA agrees with the Competition Commission that monitoring competition cases internationally is essential, and also supports the Commission’s policy of looking at other SA regulators and laws as a part of the overall policies towards a fair and balanced competition policy in SA.

The EFSA response will be completed on 5 October and will be available on request ([email protected]).