Online platform report looms

“strengthen enforcement going forward”

Heather Irvine Bowmans

Some 26 months after initiating a wide-ranging market inquiry into online platforms, the Competition Commission has been given a further extension to publish its final report

The Commission’ s Provisional Report identified 10 “leading” online platforms Google, Property24, Private Property, Autotrader and Cars co za, Mr Delivery and UberEats; Booking com; Takealot and Apple which it says enjoy “first-mover to scale advantages” and employ “strategies to retain and extend leadership” in markets which have irreversibly tipped

This, the commission says, is a “feature of a market” which has distorted, impeded or restricted competition in SA and, accordingly, the commission has recommended a series of sweeping “remedies” using its new market inquiry powers set out in section 43A-G of the Competition Act

For SA’ s most successful homegrown tech player, Takealot, for example, the commission recommends a substantial internal business restructure, to separate its own retail operation from its marketplace hosting third- party sellers The commission suggests that leading online platforms should refrain from applying parity clauses which require that those customers who do choose to use their online services should refrain from undercutting their pricing on their own website, or on other online platforms

In the case of Mr Delivery, the commission recommends the implementation by restaurants of a standardised rate card for online delivery services and a restriction on the ability of international and national restaurant chains to contract with it on a national basis, across the whole store network To address various different kinds of perceived “unfairness” to small busi- food delivery and travel) and even price regulation (software application stores)

Finally, the provisional report concluded that all “leading” platforms “attract some obligation to offset the cumulative disadvantages” faced by business owned by “historically disadvantaged persons ” (HDP) and, accordingly, that they should all be “required” to “institute an HDP programme targeted at overcoming barriers to participation” under the act and/or in which the commission has stepped outside of the boundaries of its powers under the amended legislation

This, the notice says, “differs from the provisional report proposal insofar as it does not set out to prohibit certain conduct, or make determinations on leading platforms, but rather to identify factors relevant to the assessment of market power and conduct subject to existing provisions in the act in the context of online intermediation platforms as guidance to the commission and the courts” torted competition, whereas future entrants, or platforms already in SA who grow, will only face complaints in terms of the act if once they can be considered to be “dominant” and engage in conduct which constitutes an abuse of their dominant position ness and/or firms owned and controlled by historically disadvantaged persons, the provisional report suggested significant interference with current contracts (ecommerce, online classifieds,

The comments on the provisional report (on the commission’ s website) identify a number of conceptual flaws in the commission’ s analysis, as well as instances in which the commission hasn’t gathered any evidence of the effect on competition which is required by the act as the trigger for any exercise of the commission’ s powers

Given the scope of the comments received, it is perhaps not surprising that the deadline for the inquiry to publish its final report was initially extended to April 18 2023 In the meanwhile, however, the inquiry published a notice in which it outlined additional proposed remedial action, namely that the department of trade industry & competition (DTIC) minister should publish regulations under the act which will apply “in guiding the courts in interpreting the existing legislation within specific contexts, by providing a list of factors that are relevant to the assessment of existing provisions in the act in that specific context” , to

In addition, the notice proposed that nonbinding guidelines would be published by the commission in terms of section 79 of the act, to complement the minister’ s section 78 regulations through “providing guidance on best practice by online intermediation platforms such that they remain compliant with the act”

The inquiry subsequently clarified that these proposed regulations were not in lieu of the remedial action and recommendations that will be contained in the inquiry’ s final report, but rather were intended to apply in addition to these

This creates the rather peculiar outcome that online platforms who are currently identified as “leading” may face findings or recommendations by the commission pursuant to this market inquiry based on the fact that their conduct (and only their conduct) is a feature of a market which has allegedly impeded, restricted or dis-

It is also not clear whether the commission intends to codify all of its findings and recommendations into guidelines and apply them to all online platforms going forward and, if so, whether this kind of rule-making by an administrative body like the commission will pass constitutional muster

Perhaps most importantly, it is unclear how the commission’ s efforts will support SA’ s broader strategy to attract more investment into the country by global technology companies and drive the greater adoption of new digital technologies which the president identified in his annual ANC statement on January 8 2023 as crucial for SA’ s economic growth and development, especially in areas such as healthcare, education and community safety

The impact of any proposed findings and/or recommendations by the commission on these imperatives, and on the work of other departments such as communications & digital technologies to support them, will need to be carefully considered by the commission and the DTIC before the final report is issued on May 19 2023