The Competition Commission has announced that it will be conducting a market inquiry to assess the competitiveness of “middle man” online trading platform service providers, who intermediate transactions between consumers and businesses.
The ‘Online Intermediation Platforms Market Inquiry’ will be conducted in terms of Chapter 4A of the Competition Act, 89 of 1998, following the emergence of complaints regarding the sector, the commission said.
The focus for the inquiry will be on online intermediation services which intermediate online transactions between business and consumers for goods, services and software. Such platforms include eCommerce platforms, travel aggregators, food delivery, short-term accommodation rentals, online classifieds and app stores.
“The commission may initiate an inquiry where it has reason to believe that there exist market features which impede, distort or restrict competition amongst the platforms themselves, and which undermine the purposes of the Act,” the commission said,
Digital platform markets have been at the forefront of global competition law debates in recent years due to the growing importance of digital platforms in the economy and the high levels of concentration in many of these markets.
“A number of competition authorities have initiated market inquiries, or market investigations, to address the unique challenges of digital markets. This stems from a recognition that normal enforcement tools may be inadequate on their own to prevent initial market leaders from durably entrenching their position and addressing the irreversibly concentrated platform markets,” the commission said.
The commission said features of these markets and platform business models had been found internationally to create barriers to entry for rival platforms, such as pricing parity clauses, exclusive agreements or conglomerate data sharing and cross-promotion.
“The importance of certain platforms for reaching consumers online makes business users dependent on them, with issues arising in terms of self preferencing, discrimination, unfair trading terms, extraction of business data and the potential distortion from ranking algorithms all impacting on competition and participation amongst business users on these platforms,” the commission said.
“Already in South Africa these markets are becoming concentrated and complaints from business users are emerging.”
The commission said the inquiry would increase transparency of some of the business practices of online platform markets and he impact on competition. Online trading has surged in SA during the Covid-19 pandemic.