Competition Commission to investigate Takealot, UberEats and other e-tailers for the next 18 months

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The inquiry is focused on market features that may hinder competition.
The inquiry is focused on market features that may hinder competition.
  • The Competition Commission on Wednesday officially launched the Online Intermediation Platforms Market Inquiry.
  • To make it easier for the public, competition commissioner Tembinkosi Bonakele, has renamed the inquiry as the "online market inquiry". 
  • Investigations into competition in e-commerce platforms in South Africa will commence over 18 months. 

Dubbed the "Online Market Inquiry", the Competition Commission on Wednesday officially launched the Online Intermediation Platforms Market Inquiry, an investigation into e-commerce platforms in South Africa.

The inquiry is focused on market features that may hinder competition, give rise to exploitative treatment and impact on the participation of small and medium-sized enterprises (SMEs).

The commission's chief economist and acting deputy commissioner, James Hodge, will be leading the inquiry.

Competition commissioner Tembinkosi Bonakele said at a media briefing the probe into digital markets as a fast-emerging sector is one of the commission's key priorities.

"The commission has initiated this market inquiry because it has reason to believe that there exists market features or a combination of features which impede or distort strict competition among online platforms. This may undermine the purpose of the Competition Act," said Bonakele.

Online intermediation platforms include e-commerce marketplaces, online classified marketplaces, software application stores and intermediated services such as accommodation, travel, transport and food delivery.

The inquiry will, however, not deal with e-hailing platforms such as Uber or Bolt, FinTech companies and internet search and social media platforms, except to the extent that they impact on platform competition or compete themselves.

The inquiry will take 18 months and a timeline has been published, which will begin with submissions by market participants and other interested parties to provide views and information on the operation of online intermediation platform markets in SA before 10 June, followed by 19 days of public hearings in November.

According to Hodge, the probe will focus on features of online markets that may give them an unfair advantage and prove harmful for businesses and consumers.

"There is a recognition that online markets have some unique features such as strong network effects and the importance of consumer data which can drive the potential 'winner takes all' outcome creating a dependency for businesses and consumers which can then be exploited," said Bonakele.

Previously, the commission had highlighted Takealot as a point of focus for the inquiry as it is much bigger than other online retailers in SA, which warrants concern over its dominance of the market.

The concern is that a big player like Takealot has the potential to squeeze out competitors and this is where the commission comes in with regulations that will even out the playing field in a fair and equitable way.

The commission said it hopes to release its preliminary findings and recommendations in May 2022.

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