The Competition Commission’s first inquiry into the digital economy is likely to unmask matters relevant to future market inquiries in the digital economy.

The Competition Commission on May 19 officially embarked on an inquiry into online commerce platforms, also referred to as online intermediation platforms, after gazetting the final terms of reference on April 9 and publishing the Statement of Issues, which is out for comment until June 18.

“The online market inquiry marks the Commission's first market inquiry foray into the digital economy and is likely to identify issues that may be relevant to subsequent market inquiries into different aspects of the digital economy,” said Werksmans Attorneys competition law director Dominique Arteiro.

Online intermediation platforms are digital platforms that facilitate transactions between business users and consumers for the sale of goods, services and software, including e-commerce marketplaces, online classified marketplaces, software application stores and intermediated services such as accommodation, travel, transport and food delivery.

“Online markets have become an increasingly important channel for businesses to reach consumers, a trend which has accelerated under the Covid-19 pandemic and which is likely to continue,” said Commissioner Tembinkosi Bonakele, noting that it is becoming increasingly important as one of the drivers of economic growth in South Africa.

The Competition Commission initiated the market inquiry as there are reasons to believe that market features, or a combination of features, exist which impede, distort or restrict competition among online platforms, and which may undermine the purposes of the Competition Act.

“This assessment was made based on, among other things, several complaints that have been lodged with the Commission alleging anticompetitive conduct in some of the online markets,” he said.

The inquiry will focus broadly on three areas of competition and public interest, namely market features that may hinder competition among the online markets, market features that may give rise to discriminatory or exploitative treatment of business users, and market features that may negatively impact on the participation of small and medium-sized enterprises and historically-disadvantaged persons-owned businesses.

The inquiry will exclude e-hailing services, which were the subject of the Public Passenger Transport Market Inquiry, search and social media platforms and fintech platforms. “Pure” gig economy platforms are also excluded.

The closing date for submissions on the issues outlined in the Commission's Statement of Issues is June 18.

“Those intending making written submissions to the online market inquiry, or obliged to provide information and documentation to the online market inquiry, should be sure to claim all relevant confidential information as such in your submissions and in accordance with the prescribed procedures,” Arteiro advised.

Following the analysis of the submissions received on the Statement of Issues, the inquiry will publish a second Statement of Issues in the week of August 9 focused on key emerging issues for stakeholders to make submissions by September 10.

The inquiry will also conduct further online surveys around emerging issues and further information requests to some market participants.

Virtual public hearings will be undertaken from November 1 to 19.

“By the first week of May 2022 the inquiry anticipates releasing its preliminary findings and recommendations. The inquiry will invite submissions on these findings and recommendations by June 10, 2022, before releasing its final findings and recommendations in November 2022.”

Competition Commission acting deputy commissioner and chief economist James Hodge has been appointed as the inquiry’s chairperson, while Doris Tshepe has been appointed as a panel member of the inquiry.

The panel will be assisted by a technical team co-headed by Itumeleng Lesofe and Hariprasad Govinda.