Investigation into Takealot, UberEats and Google in South Africa pushed back
The Minister of Trade, Industry and Competition has again 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 on Wednesday (19 April), the minister extended the period of completion of the Online Intermediation Platforms Market Inquiry (OIPMI) to 19 May 2023 – an extension of another month.
This makes the total extension six months. The final report was expected to be submitted on 18 November 2022, but was extended by three months to 18 February 2023. In February, it was extended by two months to April.
This gives the commission more time to process stakeholder feedback on the preliminary findings published in July 2022.
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.
This includes:
- Apple App Store;
- Google Play Store;
- Takealot;
- Booking.com;
- Airbnb;
- Mr Delivery;
- Uber Eats;
- Property24;
- Private Property;
- AutoTrader;
- Cars.co.za;
- Google Search.
In July 2022, 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
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