Competition Commission imposes remedial actions for Google, Takealot, UberEats conduct

31 July 2023 - 18:15 By THABISO MOCHIKO
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The Competition Commission has released a report on online e-commerce, and imposed remedial action on several companies including Mr D and Uber Eats.
The Competition Commission has released a report on online e-commerce, and imposed remedial action on several companies including Mr D and Uber Eats.
Image: Mr D Competition Commission

The Competition Commission has imposed a raft of remedial action on online platforms that will give greater visibility and opportunities for small South African digital businesses.

The commission released its final report on the Online Intermediation Platforms Market Inquiry that looked into business conduct of e-commerce, online travel agencies, food delivery, property and vehicle and property online classifieds, and app stores.

The commission said it had reason to believe there were market features of online intermediation platforms that may impede, distort or restrict competition.

It imposed remedial action on companies such as Takealot, UberEats, Mr D Food, Property24, Private Property, AutoTrader, and Apple.

The commission wants a level playing field for small businesses selling through these platforms, including fairer pricing and opportunities for gaining visibility and customer acquisition, relative to the large national businesses they compete with.

On Google, the inquiry found that Google Search dominance and business model distorted platform competition as small and new platforms struggled for visibility and customer acquisition. 

It wants Google to “introduce a new platform sites unit (or carousel) to display smaller SA platforms relevant to the search (for example travel platforms in a travel search) for free, and augment organic results with a content-rich display”. 

Google must also introduce a “SA flag identifier and SA platform search filter to aid consumers to easily identify and support local platforms in competition to global ones”. 

On paid results, Google must provide R180m in advertising credits for small platforms to use in customer acquisition along with free training to optimise advertising campaigns.

Google must also provide a further R150m in training, product support and other measures for SMEs and black-owned online firms to offset the competitive disadvantages faced on Google Search. 

On e-commerce platform Takealot, the commission found a conflict of interest as its own retail division competed with other sellers, and this had led to behaviour that disadvantaged sellers.

“It also found that the business model provides additional restrictions to the participation of historically disadvantaged businesses, among them that onboarding favours established businesses along with other promotional features,” it said. 

To address this distortion, Takealot is to implement a programme for historically disadvantaged people (HDP), which provides personalised onboarding, the waiver of subscription fees for the first three months and at least R2,000 advertising credit for use in the first three months.

It must also offer promotional rebates and the inclusion of HDPs in HDP-specific campaigns on the platform, and a programme that supports HDPs such as women, youth and rural enterprises with business mentoring and funding support.

On food delivery businesses, the commission said local delivery platforms competing with Uber Eats and Mr D Food faced restrictions on restaurant franchisees listing with them and were disadvantaged by the lack of transparency on menu surcharges on and across platforms.

“This hurts consumers too,” it said.

Moreover, independent restaurants lacked negotiating power with Uber Eats and Mr D Food resulting in higher commission fees than the restaurant chains, forcing them to push up prices to consumers, and less choice in trading off service levels for fees.

The commission said restaurant chains were no longer allowed to restrict their franchisees from listing on local delivery platforms of their choice. Uber Eats and Mr D Food must also offer lower commission fees and improved value for independent restaurants. 

Commissioner Doris Tshepe said the global and domestic concern that digital platforms were inexplicably concentrated or prone to tipping in that direction, and that competition law had failed to adequately maintain competition in digital markets.

“While this is true for global markets, domestic digital markets are less mature and so early intervention was seen as a means to try to sustain competition as these markets matured,” she said.

The commission said the remedial actions should enable “more intense platform competition in each of these categories, which will offer businesses that list on the platforms and consumers more choice and innovation”. The commission said this should result in lower prices for the businesses listing on the platforms, and for consumers.


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