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Market Inquiry into Online Intermediation Platform Services on the Cards

April 12, 2021

Department of Economic Development

A Market Inquiry into Online Intermediation Platform Services in South Africa is on the cards.

The economic development department announced the Competition Commission’s plan to launch the Inquiry in Government Gazette 44432.

According to the Commission, the Inquiry will be launched “given that the Commission has reason to believe that there exist market features which impede, distort or restrict competition amongst the platforms themselves, and which undermine the purposes of the Act”.

The Commission also points out that complaints alleging anticompetitive conduct in some of the platform markets have also been received.

The Commission emphasized that an Inquiry is important in the “context where online commerce has accelerated under the Covid-19 pandemic and is fast becoming an essential route to market for many South African businesses”.

The Inquiry will focus on online intermediation service platform markets which intermediate transactions between business users and consumers including the generation of transactions leads.

Platforms under the spotlight include eCommerce marketplaces; online classifieds; travel and accommodation aggregators; short term accommodation intermediation; food delivery and application stores.

Key objectives of the Inquiry include evaluating trends in adoption and use of the different online intermediation platform markets; evaluating whether any market features, platform conduct and/or contracts and terms of use with business users and consumers are likely to have the effect of raising barriers to entry and reducing competition amongst platforms domestically; evaluating other barriers to entry and expansion by rival platforms, including but not limited to network effects, capital costs and consumer marketing costs; evaluating whether ranking algorithms used by platforms, including any pay for position or promotional opportunities, negatively impact competition on the merits, consumer choice and/or the participation of SMEs and HDP owned business users and drawing up appropriate remedies where an adverse effect on competition or the purposes of the act are found.

The Inquiry will get underway 20 business days after the date of publication of the Terms of Reference.

The plan is to produce a final report within 18 months.