The Competition Commission (the Commission) formally initiated the Online Intermediation Platforms Market Inquiry on 19 May 2021 in terms of section 43B(1)(a) of the Competition Act 89 of 1998 (as amended). This being its first step to level the playing field for online platforms. These are digital platforms that facilitate transactions of goods, services and software between business users and consumers.

These platforms include the eCommerce marketplaces such as Loot, Takealot, and OneDayOnly, online classified marketplaces such as Property24, Private Property, Autotrader and Cars.co.za, software application stores which includes Google Play store and Apple’s app store and the intermediated services which includes accommodation, travel, transport and food delivery such as Booking.com, Airbnb, UberEats, Mr D foods and Bolt.

The Commission had reason to believe that there were market features on these platforms that may impede, distort or restrict competition. Their purpose was to ensure that consumers and businesses that use these platforms benefit from competition amongst them and that small and medium enterprises (SMEs) and historically disadvantaged persons (HDPs) also get to participate fairly in this market.

Scope of Online Platforms Market Inquiry

As set the Commissions ‘Terms of Reference’ which was published on 9 April 2021 and focused on four main areas, namely:

1. market features that may hinder competition amongst the platforms themselves.
2. market features that may hinder competition amongst business users or undermine consumer choice.
3. market features that give rise to exploitative treatment of business users.
4. market features that may negatively impact on the participation of SMEs and/or HDP firms.

Provisional Report Findings

On 15 July 2022, the Commission released its provisional report for public comment. This Report highlighted concerns such as lack of transparency, exploitative fees, asymmetric business terms, platform exclusivity, self-preferencing conduct and inadequate app store competition. The need for transformation and support for HDPs in the digital economy was also emphasized.

Final Report Findings

On Monday 31 July 2023, the Commission released its final report with its findings and recommendations.

Some of the findings include:

• Google Search is a critical gateway to consumers for all platforms and its business model of paid search alongside free results favours large established platforms.
• Booking.com’s restrictions on hotel pricing on other online channels limits competition and creates a dependency that is used to extract higher commission fees.
• Takealot faces a conflict of interest on its site as its retail division competes with marketplace sellers leading to behaviour that has disadvantaged sellers.
• Google Play and Apple App stores are unconstrained in the commission fees they charge app developers, and their global business model limits the duration and visibility of SA-paid apps.
• Uber Eats and Mr D Food are disadvantaged by the lack of transparency on menu surcharges across platforms and restrictions placed on franchisees by national restaurant chains.
• Property24 and Private Property competitors are hindered by the lack of interoperability in providing property listings, and small estate agents and automotive dealers are disadvantaged by the discriminatory pricing of Property24, AutoTrader, and Cars.co.za that favours large national groups.
• Property24 and Private Property, the leading platforms in this area have used a partnership or commercial stake with the leading national estate agents to deprive other platforms of their support. Private Property's unique partnership with large national estate agencies via its relationship with industry associations (such as Real Estate Business Owners of South Africa (REBOSA) have facilitated both platforms securing the majority of listings, creating barriers to entry for other platforms. These respective arrangements have and continue to undermine platform competition through depriving new platforms of support from the largest agencies outside the two incumbent platforms, and stifles innovation by picking one champion to challenge Property24.

The market restricting features include the:

1. Use of engine software by estate agents to manage their listings and feed them onto their own websites in those of property classifieds.
2. Use of PropData as the largest independent supplier of syndication software to estate agents - smaller syndication software providers feed out to all platforms but not PropData. The result is that 70% of estate agents wishing to list on alternative classified platforms face considerable practical barriers.
3. Consolidation and reinforcing of Property24’s and Private Property’s position as the leading property classified, by applying R500 “feed-in fee” from external syndication software. The fee impedes competition at a syndication software level.
4. Application of pricing models which result in extensive price discrimination based on the volume of listings an agency or dealer brings. This discriminates against smaller agents and dealers.

Remedial Action

The range of remedial actions that has been included will provide greater visibility for smaller platforms, enable more intense platform competition and level the playing field.

To remedy the aforementioned market distortions, the Commission has instructed Property24 and Private Property to facilitate the following:

1. Interoperability must be provided at no fee for estate agents in order for them to feed listings to other platforms.
2. Charging for incoming listings as well as multiyear contracts with large agencies must be terminated.
3. REBOSA have separately been instructed to cease its support of Private Property as the preferred platform for the industry.
4. Property24 must introduce a Small Independent Business Package (SIBP) priced at an average per lead or listing level within 15% of the average of all other business users, reducing to 10% land introduce a free historically disadvantaged persons (HDP) programme. This HDP program must provide personalised training, including site design and support, branded listings, five value-added services per month, and access to the market intelligence report. New HDP agents must also receive a 12-month free standard listing subscription.
5. The Commission will separately launch an application at the Competition Tribunal for the national agencies to divest their shareholding in Private Property.

Both platforms will be given time to implement the remedial actions depending on the complexity of the remedy. Property24 has already implemented the removal of the R500 feed-in fee for customers using third party vendors to feed into their application.

Takealot, Google, Bookings.com and Mr Delivery will now have to make changes to their operations to ensure that all businesses have equal access to their services.

The range of remedial actions has been included will provide greater visibility for smaller platforms, enable more intense platform competition and assist to level the playing field for small businesses.

By Fatima Osman (Partner) and Bongi Maseko (Legal Professional Assistant) at Dentons in South Africa