South Africa’s competition commission has released a report outlining the findings of an investigation into competitive practices of some leading online platforms and remedial actions to those practices it deemed as anti-competitive.
South Africa’s competition commission has released its Online Intermediation Platforms Market Inquiry (OIPMI) final report [pdf]. The report is a culmination of almost two years of investigations into local and international business-to-consumer (B2C) online platform markets and identifies features that adversely affect competition in these markets.
It includes a set of remedial actions that platforms, and some businesses, are required to implement to remedy the identified market features that adversely affect competition.
The platforms required to implement remedial actions are leading platforms such as Google, Booking.com, Takealot, Apple, Uber Eats, Mr D Food, Property24, Private Property, AutoTrader, and Cars.co.za. Other businesses include national restaurant chains, Bolt Food, and Prop Data.
Key findings
Some of the findings include that Google Search is a critical gateway to consumers for all platforms and its business model of paid search alongside free results favours large established platforms.
With regards to travel, Booking.com’s restrictions on hotel pricing on other online channels limits competition and creates a dependency that is used to extract higher commission fees. In e-commerce, Takealot faces a conflict of interest on its site as its retail division competes with the marketplace sellers leading to behaviour that has disadvantaged sellers.
Google Play and Apple App stores are unconstrained in the commission fees they charge app developers, and their global business model limits the curation and visibility of SA-paid apps. Another finding is that competitors to Uber Eats and Mr D Food are disadvantaged by the lack of transparency on menu surcharges across platforms and restrictions placed on franchisees by national restaurant chains.
According to the report, competitors to Property24 and Private Property are hindered by the lack of interoperability in providing property listings, and small estate agents and automotive dealers are disadvantaged by the discriminatory pricing of Property24, AutoTrader, and Cars.co.za which favours large national groups.
Remedial actions
To address these findings, the OIPMI has included remedial actions which include Google providing a South African badge and search filter to aid consumer support for SA platforms and introducing a new platform sites unit to display smaller SA platforms relevant to the search, along with training and R180m in advertising credits. Google is to implement in SA changes it makes in Europe to address self-preferencing.
Booking.com is required to remove the restrictive pricing clauses from its
contracts while Takealot is to segregate its retail division from its marketplace operations. This will prevent the latter’s retail services from accessing seller data and unilaterally stopping sellers from competing for certain brands.
Additionally, Google Play and Apple App stores are to stop preventing apps from directing consumers to pay on the app’s website and to ensure continued free use by consumers of content purchased from that website, along with local app curation.
Uber Eats and Mr D Food are required to inform consumers that they charge restaurants a commission fee. Additionally, they are expected to communicate that menu items may be priced differently to takeaway menus, and that restaurant chains may not unreasonably restrict the choice of food delivery service by franchisees.
Property classifieds are required to put in place the ability of estate agencies to share their listings with other classifieds. Property24, AutoTrader, and Cars.co.za are also required to substantially reduce the price of listings to small and medium independent agencies and dealers.
According to the commission, remedial actions should provide the following benefits to platforms, businesses, and consumers: greater visibility and opportunity for smaller South African platforms; enable more intense platform competition; level the playing field for small businesses selling through these platforms; and provide a more inclusive digital economy.
All platforms will be given time to implement the remedial actions depending on the complexity of the remedy.
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