Access Alert: The Competition Commission of South Africa releases the Final Report on the Online Intermediation Platforms Market Inquiry

Access Alert: The Competition Commission of South Africa releases the Final Report on the Online Intermediation Platforms Market Inquiry

On 31 July 2023, the Competition Commission of South Africa released a long-awaited report on competition issues affecting online intermediation platforms. These refer to e-commerce marketplaces, online classified marketplaces, software application stores, and intermediated services, such as those in accommodation, travel and transport, and food delivery.

The market inquiry affects global and domestic companies, including Google Search, Booking.com, Airbnb, Takealot, Amazon (although the company has not yet established its presence in South Africa), Apple App Store, Google Play, Autotrader, Cars.co.za, Propery24, Private Property, Uber Eats, and Mr D Food.

Background

The Competition Commission formally initiated the Online Intermediation Platforms Market Inquiry (OIPMI) in May 2021 through the Competition Act (as amended). The Inquiry was initiated for two reasons: (i) because the Commission believed that online intermediation platforms contained market features that may impede, distort, or restrict competition; and (ii) to determine whether the participation of small and medium enterprises (SMEs) and historically disadvantaged persons (HDPs) in digital markets was adversely impacted.

Findings and remedial actions

The final report is expansive. For purposes of this Access Alert, Google, Booking.com, and Apple will be scrutinised.

Google Search

The Competition Commission finds that Google Search is dominant and its business model distorts platform competition, with SMEs and new platforms struggling for visibility and customer acquisition. The remedial actions include a focus on improving paid and organic result visibility for smaller SA platforms and a requirement to introduce an SA flag identifier and SA platform search filter to aid consumers in easily identifying and supporting local platforms in competition with global ones. Google must also provide ZAR 180 million (USD 9.6 million) in advertising credits for small platforms to use in customer acquisition, along with free training to optimise advertising campaigns.

Travel and Accommodation

The Competition Commission finds that Booking.com’s wide and narrow price parity clauses impede competition. Booking.com imposes the narrow price parity, which entails preventing hotels and other establishments from offering lower prices on their own websites for online bookings. The remedial action put forward by the Competition Commission is the removal of these obligations and to immediately inform all hotels and accommodation providers in South Africa that list on its platform.

Software Application Stores

The Competition Commission finds that Google Play and Apple App Store are unconstrained in the commission fees they charge paid app developers and that the anti-steering rule limits competition.  The remedial actions put forward are a requirement for Google Play and Apple App stores to stop preventing apps from directing consumers to pay on the app’s own website and to ensure continued free use by consumers of content purchased from that website.

The Competition Commission further finds that the global business model of the application stores limits the curation, visibility, and discoverability of local SA paid app developers. Therefore, the commission recommends that both Google and Apple provide a South African curation of apps on their app stores and offer advertising credits to SA app developers.

Conclusion

This market inquiry was predominantly influenced by the Digital Markets Act in the EU, and there are expectations that the remedial actions imposed in the EU markets on global tech companies, including Apple, should also be implemented in SA. It is important to be cognisant of the fact that the recommendations of the final report on the Online Intermediation Platforms Market Inquiry by the Commission are binding.

Access Partnership closely monitors the regulatory and policy development in tech and digital space, as well as market inquiry reports and updates by various Competition Commission Authorities.

For more information, please contact Jan Magoro at [email protected] and Wydeman Coetzee at [email protected].

 

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