Subhead:
The dynamics in the rapid evolution of the digital markets continue to challenge both industry players and consumers alike.
These can easily bring about the state of uncertainty if the industry is left to self-regulate while consumers become increasingly vulnerable.
This obviously requires interventions that don’t only advocate for compliance from the sector but also monitor any anti-competitive conduct for consumer welfare.
I must, however, mention that navigating competition regulation and understanding the types of conduct that could raise competition concerns are not always clear-cut to firms active in the online intermediation platform markets.
With the increase in popularity of online intermediation platforms such as applications or websites that act as a go-between to connect businesses with consumers for transactions, the commission has developed a draft guidance note.
This seeks to provide the necessary clarity to the leading or largest platforms operating in different categories in SA on the types of conduct and practices that could be considered harmful to competing platforms or businesses listed on the platform.
It includes small and medium enterprises and businesses owned and controlled by historically disadvantaged persons.
The findings from the commission’s inquiry into online intermediation platforms revealed that online intermediation or business-to-consumer (B2C) platforms engaged in various types of conduct that have the effect of impeding or preventing competition in the online intermediation platform markets.
Given the learnings from other jurisdictions as well as the commission’s own findings from this inquiry, the commission believes a guidance note will provide the necessary practical information and clarity to online intermediation platforms operating in SA.
The guidance note can assist leading platforms in their internal assessment of compliance risks associated with certain practices.
Where platforms do engage in such practices as part of their business model, such compliance risk assessments should consider what potential impact the practices may have on competition and whether the practices are necessary for the platform’s operations and, if so, whether there are strong efficiency justifications for such practices.
In the guidance note, the commission has included illustrative examples of conduct or business practices that could raise competition concerns.
For example, an e-commerce site sells various products on its platform, including electronic items.
The e-commerce platform has a returns policy that reimburses customers immediately for products returned at the expense of the seller of that product.
The platform does not verify the reasons for the return, as the seller bears all costs.
Sellers of electronic goods on the platform often find that the product may not necessarily be faulty and would not ordinarily qualify for a reimbursement.
Such a policy results in an increase in costs to the seller. This could be considered an unfair trading condition.
Following this practical example, the guidance note goes further and encourages intermediation platforms to have mechanisms in place to guard against unfairly transferring risks to sellers.
The commission now seeks further input on the draft guidance note from the public, experts, stakeholders, and market participants.
Comments may be submitted via email to Rakshad@compcom.co.za by 4pm on November 28.
The draft guidance note is available on our website here.
All submissions will be reviewed, and a final guidance note will be published by the commission in due course.
- Makunga is spokesperson for the Competition Commission of SA
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