SACC’s tackle its #DigitalMarkets oversight & regulation – African Antitrust & Competitors Legislation


The South African Competitors Fee not too long ago contributed the next abstract of its actions concerning the ‘sizzling subject’ of so-called Digital Markets and antitrust legislation to the “Compendium” (not AAT’s, the precise authorities enforcers’ compendium doc ensuing from the multilateral G7 assembly organized by the Bundeskartellamt in Germany).

Whether or not and the way you could have sought to make use of enforcement or non-enforcement instruments, legislation
enforcement or regulatory motion to deal with such points. You might want to spotlight any
significantly related instances.

Latest instances
The Competitors Fee of South Africa (CCSA) makes use of numerous competitors enforcement instruments to resolve issues in digital markets, together with unilateral conduct enforcement, merger regulation, market inquiries and advocacy. In November 2021, the CCSA referred an abuse of dominance case in opposition to Fb Inc. (now Meta Platforms Inc) to the Competitors Tribunal (Tribunal), for adjudication. The CCSA’s investigation discovered that Fb enforced unduly restrictive entry phrases and circumstances to its WhatsApp platform, in opposition to GovChat. This was to take away GovChat’s menace to Fb’s personal social networking place and WhatsApp’s monetisation methods.

GovChat is a start-up on-line platform by means of which the South Africa authorities communicates with its residents by means of mass push notifications on the WhatsApp platform. The GovChat platform additionally permits residents to entry data or providers pertaining to varied authorities providers or programmes comparable to social grants, COVID19 providers or to reply to surveys / polls to price authorities providers / efficiency. Thus, GovChat performs a vital function within the lives of South African residents and is a vital interface between the federal government and residents. The CCSA discovered that Fb’s conducts probably contravenes the next abuse of dominance provisions contained in part 8(1) of the Competitors Act No. 89 of 1998 (as amended) –

a. refusal to offer a competitor entry to an important facility when economically possible to take action (part 8(1)(b)).
b. participating in exclusionary conduct whose anticompetitive impact is just not outweighed by any efficiencies or technological positive aspects (part 8(c)).
c. refusal to produce scarce items or providers to a competitor or buyer when economically possible to take action (part 8(1)(d)(ii)).
On the time of writing, the Tribunal had not but allotted a listening to date for this matter.

Market inquiries
In Could 2021, the CCSA launched its on-line intermediation platforms market inquiry (the “Inquiry”). The Inquiry is targeted on digital platforms within the areas of e-Commerce marketplaces, on-line classifieds, software program software shops, journey and lodging aggregators, and meals supply providers platforms. The inquiry has targeted on three areas of competitors and public curiosity, specifically (a) market options which will hinder competitors amongst the platforms themselves; (b) market options which will give rise to discriminatory or exploitative therapy of enterprise customers; and (c) market options which will negatively influence the flexibility of SMEs and/or traditionally deprived corporations to take part within the financial system.

The Inquiry launched its provisional report in July 2022 and goals to conclude its work by the tip of 2022. Amongst others, the Inquiry has provisionally discovered that Google Search performs an necessary function in directing shoppers to the completely different platforms, and on this approach shapes platform competitors. The prevalence of paid search on the high of the search outcomes web page with out enough identifiers as promoting raises platform buyer acquisition prices and favours giant, usually international, platforms. Preferential placement of their very own specialist search models additionally distorts competitors in Google’s favour. The Inquiry provisionally recommends that paid outcomes are prominently labelled as promoting with borders and shading to be clearer to shoppers and that the highest of the web page is reserved for natural, or pure, search outcomes primarily based on relevance solely, uninfluenced by funds. The Inquiry additional provisionally recommends that Google permits rivals to compete for prominence in a search by having their very own specialist models and with no assured positions for Google specialist models. The Inquiry can also be exploring whether or not the default place of Google Search on cellular gadgets ought to finish in South Africa. By way of competitors amongst platforms, the Inquiry makes the next provisional findings and suggestions, amongst others:

a. In software program software shops, there isn’t any efficient competitors for the charges charged to app builders with in-app funds, leading to excessive charges and app costs. The Inquiry’s provisional advice is that apps ought to be capable of steer shoppers to exterior web-based fee choices, or alternatively a most cap is positioned on software retailer fee charges.
b. Worth parity clauses, evident in journey & lodging, e-commerce and meals supply, hinder competitors and create dependency, and the Inquiry subsequently recommends their removing. Broad worth parity clauses stop companies providing
decrease costs on different platforms and slender parity prevents companies from providing decrease costs on their very own direct on-line channel.
c. In property classifieds and meals supply, new entrants and native supply platforms face challenges signing up giant nationwide companies, undermining their potential to compete. The Inquiry provisionally finds in property classifieds this can be a results of the funding and help of huge property businesses in Non-public Property and recommends the divesture of their stake. Facilitating the interoperability of listings on the main platforms is an additional advice to help entrants. In meals supply, nationwide restaurant chains usually stop franchisees itemizing on native supply platforms and the Inquiry recommends this observe ceases together with any incentives offered by nationwide supply platforms to steer volumes their approach.
d. In meals supply, the Inquiry additionally finds that the enterprise mannequin of considerable eater promotions alongside excessive restaurant fee charges can lead to giant surcharges on menu gadgets which isn’t clear to shoppers and distorts competitors with native supply choices. The Inquiry provisionally recommends better transparency on both the menu surcharge or the share taken by the supply platforms.
By way of competitors amongst companies on the platforms and client selection, the Inquiry makes the next provisional findings and suggestions, amongst others:

a. Throughout all platforms there’s a tendency to promote high rating search positions to companies which aren’t essentially the most related to the buyer and represent a type of promoting that isn’t clear. This impacts on client selection and competitors, particularly for SMEs that can’t spend as a lot as giant companies. The Inquiry recommends that promoting is clearly displayed as such and that the highest outcomes are reserved for natural (or pure) search outcomes.
b. The Inquiry provisionally finds that the acute ranges of charge discrimination in opposition to SMEs in on-line classifieds, meals supply and to a lesser extent journey & lodging, hinders their participation and has no coherent justification. The Inquiry provisionally recommends {that a} most cap is positioned on the charge differentials between giant and small companies, doubtlessly at 10-15%. In meals supply it is suggested that extra equitable therapy additionally happens when it comes to advertising commitments made in change for decrease fee charges.
c. In e-commerce, the Inquiry provisionally finds that conflicts of curiosity come up in working a market for third get together sellers and promoting one’s personal retail merchandise. This may occasionally end in self-preferencing conduct comparable to product gating, retail consumers given entry to vendor information to focus on profitable merchandise, preferential show adverts and promotions. The shortage of a speedy decision course of additionally provides to the prices borne by sellers. The Inquiry provisionally recommends an inner structural separation of retail from {the marketplace} to implement equitable and competitively impartial processes.
d. In software program software shops, the Inquiry provisionally finds that South African purposes (“Apps”) face challenges to their
bigger international App improvement corporations. The Inquiry provisionally recommends that App shops present country-specific curation of App suggestions and supply free promotional credit to South African App builders to reinforce
their visibility.

Concerning the participation by traditionally deprived individuals (HDPs), the Inquiry has provisionally discovered that the digital financial system is way much less inclusive to HDPs than many conventional industries. As well as, there are significantly extra challenges confronted by HDPs, particularly as regards funding and help. These are as follows:
a. For HDP digital entrepreneurs, common wealth inequality presents a hurdle to seed funding from shut associates, and the enterprise capital business provides little at this stage. Past seed funding, enterprise capital funds solely hunt down HDP entrepreneurs the place these funds have an specific mandate to that impact. Such mandates are uncommon past the SA SME Fund (a joint authorities and CEO initiative). The Inquiry provisionally recommends particular commitments on HDP mandates from personal buyers and for presidency to channel funds for HDP digital entrepreneurs by means of mandates to the enterprise capital sector together with necessities for transformation of the sector.
b. A scarcity of belongings and funding hinder HDP enterprise’ potential to onboard and exploit the alternatives offered by digital platforms.
advice is that every one main platforms present HDP companies with personalised onboarding, a waiver on onboarding prices and costs, free promotional credit, charges which can be no larger than the very best positioned, and the chance for shoppers to find HDP companies on the platform.

Advocacy interventions

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The CCSA has continued its work with the Intergovernmental Fintech Working Group (“IFWG”), which incorporates monetary providers regulators in addition to the data regulator. The IFWG has produced a number of place papers. These embody Regulating Open Finance Session and Analysis Paper, FinTech platform exercise in South Africa and its regulatory implications; and the place paper on crypto belongings. These papers search to grasp the rising function of FinTech’s and innovation within the South African monetary sector and discover how regulators can extra proactively assess rising dangers and alternatives available in the market. The following steps for the IFWG embody coping with buyer information possession and information requirements and fascinating with the data regulator, exposition of potential competitors facets associated to open finance and the best way to mitigate anti competitors behaviours. This showcases that the regulation of digital markets requires a multidisciplinary strategy.

Any steps your company has taken to strengthen its institutional capabilities to raised equip it to cope with digital competitors points (for instance, by forming a particular unit, recruiting extra information specialists, constructing new investigative instruments, or gathering new/completely different proof).

The CCSA has prioritised strengthening its institutional capability in digital markets by focusing on the coaching of investigators and economists in worldwide programs and conferences to improve expertise. Nevertheless, the CCSA has used an lively enforcement strategy because the prime car for deepening its understanding of those markets and to improve toolkits on the similar time. The CCSA had initiated a undertaking to make use of digital instruments within the detection and investigation of collusion and help usually on digital market instances. The CCSA has partnered with tutorial establishments to herald their synthetic intelligence experience somewhat than looking for to rent and construct inner capability.

Following engagements with nationwide and provincial governments to grasp the extent and format of tender data, the Fee has begun a strategy of designing algorithmic programmes to detect collusion. This has been drastically aided by engagements with different competitors businesses globally to debate their expertise as to what has labored and what has not. Equally, for information specialists the CCSA has not sought to rent in these expertise but however somewhat to place collectively a panel of native consultants that could be drawn on in enforcement or analysis. This strategy was adopted as the very best means to ascertain what the use case is for such expertise, what particular expertise are most respected and the frequency of knowledge specialist necessities. It is just if there may be an ongoing demand in investigation throughout completely different enforcement areas and the flexibility to sustainable supply the appropriate skillsets that the CCSA will put money into hiring. The panel strategy can also be a way to curiosity information scientists in competitors legislation enforcement and doubtlessly set up profession paths on this space. The CCSA along with the competitors authorities of Egypt, Kenya, Nigeria and Mauritius, launched a digital markets enforcement initiative, given the better shared challenges that digital markets pose for African international locations. The aforementioned jurisdictions acknowledge that these challenges necessitate nearer co-operation to be able to share data, develop efficient methods in digital markets and supply a stronger united entrance in coping with international tech corporations. The initiative has agreed to reinforce strategic collaboration between the authorities by: (i) Scoping the conduct in digital markets, that has been the topic of investigation in different jurisdictions, on African shoppers, companies and economies with the aim of honest regulation and enforcement in Africa (the place relevant); (b) Researching the obstacles to the emergence and enlargement of African digital platforms and corporations which will contribute to enhanced competitors and inclusion in these markets for the advantage of African shoppers and economies; (c) Cooperating within the evaluation of worldwide, continental, and regional mergers and acquisitions in digital markets, together with harmonizing the notification framework; with out prejudice to confidentiality commitments; (d) To share data in accordance with present legal guidelines and relevant protocols; and (e) Sharing data and construct capability to cope with digital markets. As a part of this initiative, a collection of technical workshops are forthcoming in 2022 to begin the collaborative baseline analysis mapping the digital panorama in all taking part international locations. This analysis will help in acquiring a deeper understanding of the extent of client adoption and rising market construction throughout the primary kinds of digital markets in a rustic. Nation-specific components throughout Africa will influence on the extent of adoption by shoppers and the emergence of home digital corporations alongside international ones.

The CCSA has continued its engagement with the European Union (EU) to supply a chance for mutual studying utilizing the SA/EU Dialogue Facility to host a collection of workshops in partnership with the Directorate-Normal of Competitors within the European Fee (DG Comp). The Dialogue has been prolonged and can study problems with remedial motion and information safety points in a forthcoming workshop in 2022.

Whether or not, in your jurisdiction, (a) there have been any nationwide reforms or new legal guidelines or laws to raised deal with digital competitors points, or (b) there are any vital proposed reforms pending earlier than nationwide legislative or regulatory our bodies to raised deal with digital competitors points.

The Inquiry has provisionally recognized the potential want for proactive laws or pointers in respect of some classes of circumstances along with the remedial motion proposed within the provisional report. First, to carry doubtlessly new main platforms throughout the ambit of the present proposed treatments that might be imposed on present main platforms. Second, to proactively stop sure conduct in intermediation platforms which can be nonetheless maturing and the place the conduct is prone to emerge sooner or later, however the place there may be clear potential for hurt. The provisional proposal for laws or pointers would cowl the next areas: a. A course of for the identification and evaluate of main platform standing b. Prohibition of the next conduct which has an antagonistic impact on intermediation platform competitors (1) Using worth parity clauses (broad or slender) or achievement of the identical consequence by means of worth high quality components within the SERP rating algorithm; (2) Restrictions or frictions on multi-homing by enterprise customers together with exclusivity preparations, interoperability limitations and multi-year contracting; (3) Loyalty schemes that leverage the main place of the platform, together with visibility on the platform, to get enterprise customers to fund the scheme in complete or half. c. Prohibition of the next conduct which distorts competitors amongst enterprise customers and/or leads to their exploitation (1) Self-preferencing conduct of any type; (2) Discrimination in itemizing, fee or promotional charges in opposition to SMEs/HDPs past a most cap; (3) A scarcity of enough transparency over promoted listings as promoting; (4) The extreme sale of visibility by means of demoting natural outcomes; and (5) Allowing algorithm biases that favour one group or one other.

Any legislation enforcement, regulatory, or coverage work by your company regarding digital competitors points that has concerned interplay with non-competition businesses or different legal guidelines or coverage areas—comparable to privateness, client safety, or media sustainability—and the way it was or is being dealt with.

Work within the fintech space is being completed by means of the IFWG as outlined above. The CCSA has additionally put collectively a workshop with the Data Regulator of South Africa to debate the interface of the 2 businesses round information privateness and information entry for competitors.

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