Competition Commission Publishes its Provisional Summary Report on the Ecommerce Market Inquiry

Readers will recall that the SA Competition Commission launched a ‘market inquiry into online intermediation platforms’ in April 2021. EFSA submitted three written submissions to this and took part in the oral evidence. Somewhat to our disappointment, although other submissions were published on the Competition Commission’s website and other sessions of evidence were made available, a search for EFSA’s submissions/evidence will not turn up much. Obviously, we were not singing the tune ComComp wanted to hear. The inquiry investigated “online intermediation platforms”, which include platforms facilitating ecommerce (mainly Takealot), app stores (Google Search and Apple Apps), travel and accommodation (TravelStart), food delivery (Mr Delivery and Uber Eats), and online classifieds (Property24).

The Inquiry identified market features that have adverse effects on competition – both amongst the various platforms, as well as between businesses using these platforms – or which result in exploitation due to a lack of competition. It also considered the extent to which small and medium enterprises and Historically Disadvantaged Persons (HDPs) participate and compete, and it recommends that investors concentrate their funding on these businesses in the future. This may be where EFSA’s narrative did not fit. We stressed strongly that social commerce includes many sole proprietors and SME e-merchants most of whom are HDPs, and that there are at least 300,000 of these in South Africa. What we miss here is the independent research we need to prove this point. Sadly, so far no one has seen fit to fund a study by academics, although EFSA has a tested template and 6 universities prepared to carry out this research

The Inquiry’s provisional findings look to address several concerns identified across the various categories of 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 which exclude smaller businesses that cannot match the spending of larger players – are to be addressed with fee caps and standard rate cards.
• Asymmetric business terms that allow 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 at the behest of the supplier, not the platform.
• Self-preferencing conduct – to be addressed by separating retail operations from the 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.