Covid-19 Watch

Competition Commission launches Online Market Inquiry to ascertain factors impeding on competition

On 19 May, the Competition Commission of South Africa launched its Online Intermediation Platforms Market Inquiry to help it in understanding South African online market operations and factors hindering competition or undermining the public interest.

Online agricultural and food platforms are counted in this fold with fears running high that they may be impacted by the Inquiry’s work.

Commissioner Tembinkosi Bonakele said the Commission had initiated the online market inquiry because it had reason to believe that there existed market features that could “impede, distort or restrict competition among online platforms, which may undermine the purposes of the Competition Act,” he said.

According to the Commission, the result of the Online Market Inquiry was due to several complaints lodged by businesses and consumers, alleging anticompetitive conduct in some of the online markets.

The spike of consumer online shopping was evidenced during covid-19 lockdowns. One of the largest agricultural e-commerce firms Agrellus, based in the United States saw a ‘225% increase from 10 -31 March 2020’ as compared to the previous year.

The Commission recognised the imperative of online market but warned that consumer data would enable a drive of ‘potential winner take all outcome, creating a dependency for businesses and consumers which can be exploited.’

Against this backdrop, food retailers advertising and marketing dominance would be scrutinised as it could stifle new players in the digital market thereby creating consumer dependency it is reported.

Countries such as Australia, US and Germany were counted among leading nations introducing regulations to promote ‘contestability and to prevent exploitation of both business users and consumers.’

Commissioner Bonakele further announced that the Inquiry would focus on three areas of competition and public interest namely; market features that may hinder competition amongst the online markets themselves, market features that may give rise to discriminatory or exploitative treatment of business users, and market features that may negatively impact on the participation of SME’s and HDP owned businesses.

“The Online MARKET Inquiry will cover online markets that facilitate transactions between businesses and consumers for the sale of goods, services and software. Online intermediation platforms relevant to this market inquiry include eCommercce marketplaces, online classified market places, intermediated services such food delivery,” he said.

Acting Deputy Commissioner James Hodge will serve as chair of the Inquiry for the 18 months period to complete the inquiry.

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