South African Competition Commission Releases Summary Report and Recommendations on the Online Intermediation Platforms Market Inquiry

The South African Competition Commission (“Commission”) recently released its Provisional Summary Report (“Report”) on the Online Intermediation Platforms Market Inquiry (“OIPMI” or “Inquiry”). The Inquiry was initiated in May 2021. The Inquiry highlighted impact of platforms engaging in intermediation business such as eCommerce, app stores, travel and accommodation platforms, online classifieds and food delivery.

Of these prominent firms, the leading were found to include the Apple App Store, Google Play Store, Takealot, Booking.com, Airbnb, Mr Delivery, Uber Eats, Property24, Private Property, Auto Trader, Cars.co.za and Google Search.

At the outset, the Commission highlighted its transformation objectives as they apply to the relevant markets, by emphasizing that there needs to be a drive to ensure adequate participation by small and medium enterprises (“SMEs”) and historically disadvantaged persons (“HDPs”).

In order to address competition between the platforms, the Summary Report recommended that:

1. apps should have the ability to direct consumers to external payment options or that application stores implement a maximum commission on in-app purchases;
2. clauses regarding price parity be eliminated from platforms on travel and accommodation, eCommerce and food delivery;
3. big estate agencies get rid of their interest in Private Property;
4. nationwide restaurant chains allow their franchisees to list their products on platforms specialising in food delivery and that nationwide delivery platforms further cease to provide incentives aimed at drawing traffic to their platform;
5. there be more transparent indications of the surcharges or shares imposed by food delivery platforms;

In addition, the Inquiry recommended that:

1. paid search results are specifically marked as advertisements and that the search results appearing first are reserved for organic search outcomes;
2. a limit is placed on the different fees which may be imposed in respect of online classifieds, between big and small firms;
3. marketing commitments are treated more equitably regarding lower commission fees, particularly for delivery of food;
4. eCommerce be internally restructured, separating retail from the marketplace in order to ensure the process is an equitable and competitive one; and
5. app stores provide for country-specific app recommendations as well as free advertising credits to South African app developers to aid in maximizing visibility in the app store.

The Inquiry lastly came to the provisional conclusion that the digital economy does not accord with South Africa’s objectives relating to transformation and empowerment, and further deviates significantly from the aim to transform conventional industries.

In light of this conclusion, the Inquiry recommended that there be detailed commitments made for funding of historically disadvantaged person mandates by private funders, and that government further provide funds to HDP entrepreneurs through directives to venture capitalists. It also provisionally concluded that all leading platforms should aim to provide personalised onboarding options to HDP businesses, waive their onboarding fees and costs, grant complimentary credits and the provide consumers with the opportunity to discover HDP businesses on the relevant platform.

The provisional findings and recommendations of the Inquiry currently remain open for comment by both stakeholders and the general public. Opportunity to comment will close on 24 August 2022, whereafter it is expected that the above recommendations will be finalised.

Given the broad and material implications of these provisional recommendations, it is likely that there will be push back from several of the leading platforms.

Stay informed with the latest legal developments at Global Law Experts