Booking.com, Takealot, UberEats, Google and others under fire in South Africa online market inquiry – here are all the major findings

South Africa’s Competition Commission has published its report outlining provisional findings and recommendations of its Online Intermediation Platforms Market Inquiry.In response to the growing importance of the online economy and competition concerns in these markets emerging in other countries, the Competition Commission launched a probe into competition and participation in the online economy in 2021.

The inquiry identified leading platforms in each category of e-commerce – those that get the most consumer traffic – upon which the business users are relatively dependent, and which are, or are likely to be, entrenched.

These leading platforms are:

• Booking.com
• Apple App Store;
• Google Play Store;
• Takealot;
• com;
• Airbnb;
• Mr Delivery;
• Uber Eats;
• Property24;
• Private Property;
• AutoTrader;
• Cars.co.za;
• Google Search.

General recommendations

In terms of competition among platforms, the inquiry made the following provisional findings and recommendations, amongst others:

• Payments:In software application stores, there is no effective competition for the fees charged to app developers with in-app payments, resulting in high fees and app prices. The inquiry’s recommendation is that apps should be able to steer consumers to external web-based payment options, or alternatively, a maximum cap is placed on application store commission fees.
• Parity clauses:Price parity clauses, evident in travel and accommodation, eCommerce and food delivery, hinder competition and create dependency. The inquiry recommended their removal. Wide price parity clauses prevent businesses offering lower prices on other platforms and narrow parity prevents businesses from offering lower prices on their own direct online channels.
• Market dominance:In property classifieds and food delivery, new entrants and local delivery platforms face challenges signing up large national businesses, undermining their ability to compete. The Inquiry found in property classifieds this is a result of the investment and support of large estate agencies in Private Property and recommended the divesture of their stake. Facilitating the interoperability of listings on the leading platforms is a further recommendation to support entrants. In food delivery, national restaurant chains often prevent franchisees listing on local delivery platforms and the Inquiry recommended this practice ceases along with any incentives provided by national delivery platforms to steer volumes their way.
• Food delivery:The inquiry found that the business model of substantial eater promotions alongside high restaurant commission fees can result in large surcharges on menu items which is not transparent to consumers and distorts competition with local delivery options. The inquiry recommended greater transparency on either the menu surcharge or the share taken by the delivery platforms.
• Search rankings:Across all platforms there is a tendency to sell top-ranking search positions to businesses that are not the most relevant to the consumer and constitute a form of advertising that is not transparent. This impacts consumer choice and competition, especially for SMEs that cannot spend as much as large businesses. The inquiry recommended that advertising is clearly displayed as such and the top results be reserved for organic (or natural) search results.
• Fee discrimination:The inquiry found that the extreme levels of fee discrimination against SMEs in online classifieds, food delivery and to a lesser extent travel & accommodation, hinders their participation and has no coherent justification. The inquiry recommended that a maximum cap is placed on the fee differentials between large and small businesses, potentially at 10-15%. In food delivery, it is recommended that more equitable treatment also occurs in terms of marketing commitments made in exchange for lower commission fees.
• Online stores:In eCommerce, the Inquiry found that conflicts of interest arise in operating a marketplace for third-party sellers and selling their own retail products which can result in certain self-preferencing conduct such as product gating, retail buyers given access to seller data to target successful products, preferential display ads and promotions. The lack of a speedy resolution process also adds to the costs of sellers. The inquiry recommended an internal structural separation of retail from the marketplace to implement equitable and competitively neutral processes.
• App stores: In software application stores, the inquiry found that South African apps face challenges in being discovered in competition to larger global app development companies. The inquiry recommended that app stores provide country-specific curation of app recommendations and provide free promotional credits to South African app developers to help get visibility.

The provisional findings and recommendations will now be subject to a period of public comment and stakeholder consultation before a final report is released in November 2022. This means that the Inquiry may change its views on the findings and recommendations during this period of consultation and public submissions.

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