Takealot to be investigated by the Competition Commission

While our general government and overall public facilities and infrastructure might be an absolute mess, there’s one thing South Africa handles better than most, and that’s consumer rights. The Competition Commission is at it again, although this time it’s not going after everyone’s favourite wireless-only ISP, Rain. They’ve got online shopping goliath Takealot in the crosshairs, launching an Online Intermediation Platforms Market Inquiry (OIPMI).

Why is the Competition Commission publishing the OIPMI? Well, to hear it in their words, “As identified in the Commission’s report on Competition in the Digital Economy, as well as the plethora of inquiries and regulatory action globally, there are features of online intermediation platforms which may impede, restrict or distort platform competition but also competition between business users on those platforms. Furthermore, there are features of these markets which may undermine the public interest insofar as the potential exploitation of business users, including SMEs and firms owned by HDIs,
which may hinder their effective participation in the online economy.”

Takealot takes too much

One such problem case identified by the Commission is Takealot. “In eCommerce, Takealot (incl. Superbalist) is substantially larger than other online platforms and operates a marketplace on which many business users are now dependent as a route to market,” reads the document.

The dominance of Takealot becomes a problem when such a big company has a conflict of interest as it both sells products and offers a marketplace for third-party sellers. “The ‘dual role’ played by platform providers as the platform operator for the marketplace, and also as sellers, may provide incentives to ‘favour itself’ and squeeze the competing business users. This may be facilitated by manipulating the ranking of the platform provider’s search whereby results are biased to favour own products or preferred business users.”

The OIPMI goes on to mention that the Commission has already received complaints from folks about restrictive pricing on eCommerce platforms. It states that, “Aside from altering the ranking, other strategies such as removing business users from the platform or restricting their ability to price or promote lower than the platform’s own product are strategies that may seek to achieve the same outcome.”

We should point out that the Competition Commission isn’t just investigating Takealot. In fact, there’s a broad range of online commerce currently being examined including eCommerce, classified ads, food delivery services and software app stores. Uber Eats, Mr Delivery, AirBnB, TravelStart, Autotrader and Property24 were all specifically named in the OIPMI.

If you want the full 15 page OIPMI, you find it here but it’s not exactly a page-turner.