The Minister of Trade, Industry and Competition has extended the publication date for a final report and inquiry into online market companies such as Takealot, UberEats, Google and others.
In a gazette published this week, the minister extended the period of completion of the Online Intermediation Platforms Market Inquiry (OIPMI) from 18 November 2022 to 18 February 2023 – an extension of three months.
This gives the commission more time to process stakeholder feedback on the preliminary findings published in July.
Takealot, UberEats, Google and others under fire in South Africa online market inquiry – here are all the major findings
In response to the growing importance of the online economy and competition concerns in South Africa and other economies, the Competition Commission launched a probe into competition and participation in the online economy in 2021.
The inquiry identified leading platforms in each category of e-commerce – those that get the most consumer traffic – upon which the business users are relatively dependent, and which are, or are likely to be, entrenched.
- Apple App Store;
- Google Play Store;
- Mr Delivery;
- Uber Eats;
- Private Property;
- Google Search.
In July of this year, the Competition Commission released a report stemming from the OIPMI, noting specific non-competitive behaviour in the sector.
The commission recommended that certain considerations be taken into account regarding payment options for goods, how things are priced and what comes up when you search for them.
The commission found that there was a general lack of effective competition in the fees charged by app developers leading to high app prices, the way that most accommodation and food delivery services offer the same prices and how the market seems to be against new entrants as dominant businesses pump money behind a service.
More specifically, the commission found the following, which is need of change:
- Search rankings: The current system where top-ranking search positions are sold to businesses even if they are not relevant to consumers is advertising, said the commission. This impacts consumer choice and limits space for SMEs to enter the market.
- Fee discrimination: The commission found that fees were tailored to undermine SMEs in online classifieds, food delivery services and more. The inquiry recommended that a maximum cap is placed on the fee differentials between large and small businesses, potentially at 10-15%
- Online stores: The Inquiry found that conflicts of interest arise in operating a marketplace for third-party sellers and selling their own retail products. It recommended an internal structural separation of retail from the marketplace to implement equitable and competitively neutral processes.
- App stores: According to the investigation, South African app developers compete against larger international app development firms for users’ attention. The inquiry said that app stores should provide country-specific curation of app recommendations and provide free promotional credits to South African app developers to help get visibility
In response to some of the commission’s findings, one of the biggest players under the microscope in the report, online retail giant Takealot, said that the criticism from the commission was based on weak evidence and even called the findings defamatory, reported MyBroadBand.
This follows the retailer being implicated through the inquiry in uncompetitive behaviour.
According to MyBroadBand, Takealot further argued that brick-and-mortar retailers and other e-commerce players were constraining it. When questioned on the findings specific to food delivery platforms pushing out SMEs, Takealot, as the parent company of MrD, said that it was constrained itself with restaurants’ own delivery services, takeaway options and sit-down dining.
“This is the new economy. The world is digitising, and there is great empowerment that these platforms can do and generate a lot of jobs that traditional businesses have not been able to,” Takealot said.
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