The Competition Commission of South Africa has resolved to conduct a market inquiry into Online Intermediation Platforms, as the Commission believes that current market features impede, distort, or restrict competition amongst the platforms themselves.
The digital platform market is a central topic in the global competition law debates in recent years due to its growing importance and high concentration levels. Several competition authorities have initiated market inquiries to address digital markets' unique challenges, as it is becoming more apparent that standard enforcement tools may be inadequate on their own in preventing anticompetitive behaviour in the irreversibly concentrated platform market.
The inquiry initiation is a culmination of the work the Commission has been doing in following the global discourse on Digital Markets. In September 2020, the South African Competition Commission published a strategic view on regulating competition in the digital economy for public comment. Following written submissions and consultations with stakeholders, that report has been finalised and will be published in the nearest future.
The inquiry will focus 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 application stores, amongst others. The digital economy is rapidly growing in importance as a result of the pandemic,
is essential that competition in the digital economy is not hindered and
that the participation of SMEs and firms owned and controlled by
historically disadvantaged persons is not undermined.
Features of these markets and the platform business models have 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. Furthermore, 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. Already in South Africa, these markets are becoming concentrated, and complaints from business users are emerging.
The Commission believes that there is substantial benefit from an inquiry that will also increase transparency as to some of the business practices of online platform markets and how these practices impact competition amongst platforms and participation by business users.