Platforms question competition watchdog report

Heather Irvine

Bowmans

Various platforms took issue with the Competition Commission s provisional report s identification of leading platforms and the application only to these particular platforms of proposed remedies

Several platforms raised that in many instances, the provisional report has not defined relevant markets properly (or at all), which is a necessary step in determining whether competition really has been impeded, restricted or distorted In the context of online retail, for example The provisional report also did not examine any evidence on the extent to which SA consumers switch between traditional brick and mortar stores and online marketplaces that sell third parties products such as Takealot, Loot and Jumia, or use omnichannel retailers such as Mr Price, Checkers or Makro

The provisional report also did not identify, after defining the relevant markets, which companies are dominant firms, which have market power, and hence are restricted from engaging in price discrimination and other abuses of dominance in terms of sections 8 and 9 of the act

Instead, various platforms said, the provisional report had simply used the results of a business user survey as the basis for drawing conclusions that business users are dependent online platforms; that business users would price differently in the absence of certain terms and conditions being applied by online platforms; and to conclude that the way platforms approach ranking on their websites negatively affects business user s sales

However, this survey involved a small number of respondents, and did not apply well-established principles of survey design

Nonetheless, the provisional report had relied on the survey rather than investigating the nature and level of competition in the various business user markets, and

IT IS PERHAPS NOT SURPRISING THE DEADLINE FOR THE INQUIRY TO PUBLISH ITS FINAL REPORT WAS EXTENDED whether or how the business practices adopted by any online platform, or the fees paid to any online platform by business users such as hotels, product sellers, restaurants or software developers) may have impeded, restricted or distorted competition

Nor did the provisional report identify how any particular business practice or pricing model applied by any online platform had an effect on the ability of any small business to participate in their relevant markets

Lastly, various platforms commented that the provi- sional report did not consider the extent to which the use of online platforms by smaller SA businesses had significantly improved efficiency or lowered their costs over time

Given the scope of the comments received, it is perhaps not surprising that the deadline for the inquiry to publish its final report was extended

In the meanwhile, however, the inquiry has published a notice in which it outlined additional proposed remedial action

The final report is due to be issued on May 19 2023