The SA Competition Commission Designates Ecommerce as a Sector to be Controlled for Abuses of Buyer Power

The CCSA held 2 workshops on its new guidelines dated 22 May 2023 on buyer power abuses. EFSA attended the first of these workshops, on 14 June. Following the new Competition Act and its Guidelines of 2019, an issue which the CCSA was charged to take action against were cases where large companies applied their buyer power to force their suppliers to reduce prices or provide unfair services (such as pay for their advertising on an e-platform). The CCSA therefore had designated 3 sectors as those which were specifically prone to abuses of buyer power – the food sector, agri-processing sector and ecommerce. The CCSA said that during the OIPMI process (see above) it had noted cases where intermediation platforms applied unfair requirements on SMEs. The CCSA had also noted that both the US and EU competition bodies had taken action against e-platforms for buyer power abuses. The new guidelines allowed SMEs or HDP-owned companies to lodge a complaint with the CCSA. If the case had merit the CCSA would require that the practice be stopped (with a fine also possible) or that the practice be shown to be acceptable under the law.

The EFSA Legal Committee has considered this new guidelines and written to the CCSA asking that ecommerce should not be a designated sector for the following reasons: (1) ecommerce is not a stand-alone sector. Ecommerce companies compete with off-line retailers. Off-line retailers would therefore be at a competitive advance to online merchants; (2) If ecommerce is considered a stand-alone sector and not in competition with off-line sellers of the same products, many niche e-platforms could be accused of being dominant players; (3) applying such a discriminatory rule to ecommerce will dissuade investment; (4) SA ecommerce cannot be compared to US or EU ecommerce. Not only is SA online presence much smaller, but it also faces a number of major challenges not present in the developing countries, such as load shedding, bad condition of roads, high data costs and the digital divide.