Competition Commission calls for participation in online market inquiry

The Competition Commission is calling for participation in its online market inquiry that will take place virtually during November, in the form of public hearings into the functioning of the online economy, factors that could hinder competition or participation and proposals for solutions to any issues identified.

Large and small online platforms and retailers, businesses that use online channels to reach consumers, business organisations, venture capitalists that invest in the digital economy and the public who use online channels are all invited to take part in the Digital Markets Inquiry by going to the inquiry website.

The structure of the public hearings and how stakeholders can participate is explained on the website, that also contains an inquiry hearing form that stakeholders can complete and send to the inquiry’s email address at oipmi@compcom.co.za before the end of September. The inquiry will communicate the programme for the public hearings a week later.  

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If you cannot attend the online market inquiry

Stakeholders who are unable to attend the public hearings can also use the other measures put in place to participate. The website has a survey for businesses that uses online channels to reach consumers that will help the inquiry to understand the experience of business users and in particular:

• The extent of platform dependency
• The restrictions platforms place on their business
• The perceived fairness of search algorithms
• Platform terms and conditions
• Platform commission fees
• The impact of any unfair treatment on their business.

According to the Competition Commission, it is essential that businesses undertake the survey to ensure their voices are heard. Stakeholders can send written submissions as part of the further statement of issues to the email address.

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Why hold an online market enquiry?

South African consumers and businesses have embraced online channels since the pandemic started for:

• Shopping
• Food delivery
• Booking travel accommodation
• Research before big purchases such as cars or homes
• Downloading apps for almost every aspect of digital life.

The commission launched a probe into competition and participation in the online economy earlier this year, in response to the growing importance of the online economy and competition concerns in these markets emerging in other countries, to ensure that consumers and businesses benefit from competition among online platforms and that small and historically disadvantaged businesses also get a chance to participate fairly in the online economy.

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First phase of online market inquiry completed

The commission says the first phase of information gathering has been completed and the insights gained resulted in the release of a Further Statement of Issues (FSOI) that identified market dynamics and practices that could potentially hinder competition or result in unfair treatment of businesses using popular online platforms. These issues include:

• The extensive and growing use of sponsored ranking, its impact on consumer choice and how easy it is to discover small or historically disadvantaged businesses on these platforms
• The rationale for and impact of higher commission and listing fees small restaurants, auto dealers and estate agents have to pay compared to larger national chains on food delivery platforms and online classifieds for cars and property
• The necessity for businesses to discount or offer promotions on the platforms to get consumer visibility and the pressure from platforms to do this
• The fairness of platform terms and conditions, including payment terms, liability for loss and termination on the platform
• The general lack of platform initiatives to support the transformation of the online economy and the increased involvement by SA businesses on global platforms
• The rationale for and impact of price parity clauses imposed on businesses in e-commerce, delivery and travel and accommodation platforms
• The impact of leading platforms’ massive search engine marketing and consumer promotions on the ability of emerging platforms and individual businesses to get consumer visibility online
• Prominent brands or larger business chains failing to support emerging platforms and the impact on consumer adoption and platform growth.

The virtual public hearings will be held from 2 to 19 November and are expected to unlock a public conversation on the preliminary observations and identify any actions or business practice changes that can positively shape the burgeoning online economy to provide the best outcomes for consumers and the businesses that depend on online selling.