Competition Commission launches an investigation of online markets in SA

The Competition Commission has launched an investigation into online markets in South Africa, designed as a “proactive” measure to prevent monopolies from forming in the e-commerce space.

The inquiry will be led by the commission’s chief economist, James Hodge, who also played an integral role in the regulator’s probe of the mobile data services market, which recently led to settlement agreements over data prices with Vodacom and MTN.

“This launch takes place when online markets are becoming increasingly important as one of the drivers of economic growth,” said competition commissioner Tembinkosi Bonakele.

The commission has published a timeline for the 18-month inquiry, which will include 19 days of public hearings in November this year.

Hodge said the probe will focus on whether there are features of online markets in South Africa that “may tip them into high levels of concentration” that could prove harmful for businesses and retail consumers. He said it’s important that online markets don’t develop to reflect the inequalities present in the rest of the economy.

Definitions
The commission announced the planned market inquiry into online platforms in South Africa on 9 April. The focus, it said, will be on “online intermediation services platforms” that facilitate transactions between business users and consumers for the sale of goods, services and software, regardless of whether the transactions are concluded on the platforms themselves or offline.

Online intermediation platforms include e-commerce marketplaces, online classified marketplaces, software application stores and intermediated services such as accommodation, travel, transport and food delivery, the commission said.

The scope of the inquiry will specifically exclude e-hailing services like Uber, which were the subject of a previous inquiry. Other “pure gig economy platforms” are also excluded as are Internet search and social media companies, along with the broader digital advertising ecosystem. Fintech platforms are also excluded.

The commission said it hopes to release its preliminary findings and recommendations in May next year. It will then invite further submissions by 10 June before releasing its final findings and recommendations in November 2022.

Main Image: Jacaranda FM