The Competition Commission (“Commission”) launched its market inquiry into online intermediation platforms (“OIPMI / the Inquiry”) on the 19th of May 2021. We previously set out what this may mean for your business as well as a brief analysis of the Commission’s further statement of issues – in this article we consider what has happened in the approximately 18 months since the inquiry was launched and what the next steps are.
To recap, online intermediation platforms are defined as platforms that facilitate transactions between business users and consumers (“B2C” platforms) for the sale of goods, services and software and is not limited to instances where the transaction is concluded on the platform itself but extends to transactions concluded on the website of the business user or even offline. It includes eCommerce marketplaces, online classified marketplaces, software application stores and intermediate services (accommodation, travel, transport and food delivery).
The Commission has been moving full steam ahead with finalising the Inquiry and has concluded a number of the processes involved in an inquiry, including public hearings, collection of evidence from various stakeholders and the publication of a Provisional Report – it was however unable to finalise the Inquiry within the original time allotted and on the 2nd of November 2022, the Minister for Trade, Industry and Competition, extended the time period for completion until the 18th of February 2023.
The Inquiry is aimed at identifying features of the market that may impede, restrict or distort competition at an intermediation platform level and amongst business users of the platforms, with particular focus on market participation by SME’s and HDP’s. An important factor to bear in mind is that the test used in the Inquiry is simply whether or not a particular feature of the market has an adverse effect and does not involve a consideration as to whether or not the feature leads to a substantial prevention or lessening of competition (the test that is generally applied when determining whether or not a particular practice falls foul of the Competition Act, 89 of 1998 (“the Act”)).
KEY FINDINGS OF THE PROVISIONAL REPORT
The Online Intermediation Platforms Market Inquiry Provisional Report was published on 13 July 2022 (“the Provisional Report”) and identified leading platforms in each intermediation platform category – the Provisional Report’s findings are generally aimed at these platforms as the leading platforms are uniquely positioned to shape platform competition and are the most important when it comes to business user competition and participation opportunities. The Commission’s suggested remedies and/or recommendations are also aimed at these leading platforms and includes possible investigations into conduct which is potentially prohibited in terms of (and would therefore constitute contraventions of) the Act.
We briefly set out some of the key findings for each leading platform in respect of each intermediation platform category below (all of the Commission’s recommendations and findings can be found in the Provisional Report – the link to which can be found at the end of the article):
General Search Engines
The Commission identified Google search as the leading general search engine. One of the main issues identified is that of paid results and the way in which results are ranked – it has been recommended that ads should be better identified as being paid for and that organic (natural) search results should be displayed first. The Commission is of the view that this will lead to reducing the efficacy of paid results which will in turn reduce the price thus lowering costs to platforms and assisting smaller platforms.
Software App Stores
The leading platforms are Google Play store and Apple App store – some of the recommendations include an “…end to anti-steering provisions for all apps…” as well as “an end to default arrangements for Google Play on Android devices”.
Takealot has been identified as the leading platform in the eCommerce category and the Commission has made a number of recommendations, including removing and prohibiting price parity clauses as well as remedial action “…to end predatory conduct at a product level on a temporary or ongoing basis, or…to consider investigation and prosecution of predatory conduct…”
The Commission has divided classifieds into property (in respect of which property24 and private property are the leading platforms) and automotive (where Autotrader and Cars.co.za are the leading platforms). One of the key issues identified by the Commission relates to ensuring that the listing engine software utilised by the leading property classified platforms are interoperable with third party platforms to ensure that access to listings is also made available to new platforms. In addition, it has been recommended that charging a fee where listings come from third party platforms should be prohibited or that this practice should be investigated as possible collusive conduct.
Travel & Accommodation
Booking.com and Airbnb have been identified as the leading travel and accommodation platforms and recommendations have been made regarding the removal of price parity clauses as well as exclusionary loyalty schemes.
The Commission has identified Mr Delivery and Uber Eats as leading platforms in the food delivery platform category and has identified a number of issues including contracting with national restaurant chains in a way which incentivises them to only make use of and/or direct their volumes to the leading delivery platforms. The Commission has further recommended that restaurant chains (both international and national) must be prohibited from restricting franchisees’ choice as to which food delivery platform to use.
The Commission is mindful of the fact that similar conduct / issues may arise in future in respect of platforms which are not currently identified as “leading” and is therefore considering whether guidelines or regulations of some sort are required to ensure that this will be dealt with.
The Commission called for comments and further evidence to be provided by all parties affected by its findings and/or suggested remedies contained in the Provisional Report and will publish its final findings once these comments and any additional evidence has been reviewed (following the extension to the Inquiry, the Commission has until 18 February 2023 to publish its final report).
The OIPMI’s Terms of Reference, Statement of Issues, Further Statement of Issues, stakeholder responses and Provisional Report can be accessed here: https://www.compcom.co.za/online-intermediation-platforms-market-inquiry/
Our Competition Law Team are able and willing to assist with any queries that you may have with regard to the Inquiry and its potential impact on your business.