Tag: Digital Markets

Competition Commission Releases Online Intermediation Platform Market Inquiry Provisional Summary Report

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By Nicola Taljaard

On 13 July 2022, the South African Competition Commission (“Commission”) released a Provisional Summary Report (“Report”) on the Online Intermediation Platforms Market Inquiry (“OIPMI” or “Inquiry”) which was initiated on 19 May 2021. The Commission initiated the Inquiry following reason to believe that certain features of the online intermediation platforms market could be impeding, distorting or restricting competition.

The Commission placed specific emphasis on getting small and medium enterprises (“SMEs”) and historically disadvantaged persons (“HDPs”) to participate in the relevant markets, and premised the Inquiry on the following competition and public interest considerations in relation to market features:

  • Hampering competition between the actual platforms;
  • Hindering competition between business users or undermining consumer choice;
  • Giving rise to abusive treatment of business users; and
  • Which may have disadvantageous impacts on the ability of SMEs and/or HDPs to participate in the market.

The Commission further noted a lack of participation by HDPs as a common thread which prevails in the online intermediation platforms market, which seems to languish in an untransformed state relative to the broader South African economy.

The remedial action proposed in the Inquiry ranges in severity based on the impacts which the market features have on competition, particularly in relation to SMEs or HDPs. The leading platforms on which the remedial actions are proposed are the Apple App and Google Play stores, Takealot, Property 24 and Private Property, Autotrader and Cars.co.za, Booking.com and Airbnb, Mr. Delivery and UberEats, and Google. Although the Commission did not consider it necessary to enter a dominance inquiry, it did remark that these platforms show features of dominance when considering their positions in the respective markets.

In addition to the more general constructive proposals, the Commission also suggests provisional remedies which are more robust, including against Google, stating that it plays an integral role in how consumers interact with relevant platforms. In this regard the Commission intends to further its inquiry into the viability of keeping Google Search as the default search on mobile devices in South Africa.

The OIPMI came to the provisional conclusion that the digital economy is deficient in relation the country’s transformation goals and deviates significantly from the transformation trends of other traditional industries. The lack of transformation in most of the industries investigated as part of the intermediation platforms continues to display major barriers to entry for HDP entrepreneurs. This conclusion is particularly pertinent in light of the ever-widening digital divide.  

The Commission has made all of the documents and public submissions in relation to the Inquiry, as well as the Summary Report (which can be accessed here) available on its website. The public has six weeks within which to submit comments to the Summary Report, after which the Inquiry body has committed to consider the views and incorporate changes, where appropriate, to the final report and findings which will be released in November 2022.

South African Competition Commission Prosecutes Facebook for Abuse of Dominance

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By: Gina Lodolo

On 14 March 2022, the South African Competition Commission (“Commission”) referred a complaint against Meta Platforms Inc is the parent company of WhatsApp Inc (“WhatsApp”) and Facebook South Africa (hereafter jointly “Meta”), to the Competition Tribunal (“Tribunal”) for allegedly engaging in abuse of dominance.

The referral follows WhatsApp (as part of the  Meta group) attempting to off-board GovChat from the WhatsApp platform. GovChat is a chatbot service connecting government to millions of citizens on issues of public concern (e.g. information on COVID-19 vaccinations and social grants). GovChat is reliant on the WhatsApp platform to function and connect users, without which its entire existence will be prejudiced.

GovChat utilizes WhatsApp for their services due to WhatsApp’s scale and consumer reach, however, Meta has attempted to off-board GovChat by placing reliance on WhatsApp’s terms and conditions to enforce a restriction against monetisation of confidential information through the use of consumer data obtained on the platform.

In this regard, the Commissions media release notes that “Facebook has imposed and/or selectively enforced exclusionary terms and conditions regulating access to the WhatsApp Business API, mainly restrictions on the use of data”.

The selective enforcement by Meta and attempts to off-board GovChat from the WhatsApp platform, according to the Commission, potentially violates Section 8(d)(ii) of the Competition Act 89 of 1998 (as amended) (“Act”) which prohibits a dominant firm from abusing its dominance by “refusing to supply scarce goods or services to a competitor or customer when supplying those goods or services is economically feasible”. In the alternative, the Commission alleges that Meta has engaged in an exclusionary act or refused to give a competitor access to an essential facility when it is economically feasible to do so (under section 8(1)(b) or 8(1)(c) of the Act).

The Commission has requested the Tribunal to:

  1. Impose the maximum penalty permitted under the Act, being 10% of Meta’s turnover;
  2. Interdict Meta from off-boarding GovChat; and
  3. Declare void exclusionary terms and conditions that are selectively applied in a manner that prevents potential competition by restricting access to the WhatsApp platform for potential competitors.

In its media release, the Commission stated that “access to digital markets is dependent on access to digital platforms including as in this case, access to an important digital communication platform”.

Primerio Director, Michael-James Currie notes that this complaint referral follows an interim relief application whcih GovChat successfully obtained against Facebook and WhatsApp in the beginning of 2021 in terms of which WhatsApp was prohibited from off-boarding GovChat.

This case, says Currie also coincides with a very proactive drive by the Competition Commission to consider competitive effects in digital markets in South Africa.

The case also suggests that the Competition Commission considers the existing rules regarding abuse of dominance as being adequate to address competition concerns in the market.

For more background information click here

To access the Competition Commission media release, click here