LANDIWE J MAHLANGU AND KGANKI MATABANE: When economics and the law meet

 Transformation that will result in economic growth and inclusion is probably the outcome every sector in SA seeks to achieve.  Various  economic actors, as well as private and public institutions and civil society  have pursued this agenda, though with mixed results. 

However, the Competition Commission stands out as a state  institution that is making meaningful and commendable strides in advancing the economic transformation agenda. It has recently made groundbreaking and seminal findings.

The department of trade, industry & competition, to which the Competition Commission reports, has been largely leaderless for the best part of the past two years, with key functions being performed by stand-ins and interim personnel. 

The commission, under the stewardship of Doris Tshepe, who succeeded Tembinkosi Bonakele, has demonstrated that by steadfastly executing its mandate with diligence and determination the woes of your principal should play no part in your performance. Its recent market inquiries are probably the best examples to demonstrate the commission’s prowess. 

The market inquiry on digital intermediation platforms is a case in point.  It was launched in May 2021 and took more than two years to complete. The provisional report was released after just over a year and the final report was issued in July.

The scope of the inquiry included e-commerce, online travel agencies, food delivery, app stores and online classifieds. Google Search also formed an integral part of this probe.

The inquiry stopped in its tracks an insidious and harmful practice by the dominant players of the intermediation platforms designed to entrench their stranglehold on the industry. It also sent an unequivocal message to incoming players, such as Amazon, to think twice if they were contemplating similar practices, in whatever guise. 

What is remarkable about this market inquiry is that it not only confronted the giants of the industry head-on, including Google, Takealot, Mr Delivery, Uber, Property24, AutoTrader and Booking.com, but it also made far-reaching findings and ordered fit-for-purpose transformative and remedial actions. 

These included demanding that they cease and desist from the practice of self-preferencing, levelling the playing field in online classifieds, and requiring more disclosure of searches, transparency in advertising and more accessibility by smaller platforms. The commission also outlawed an arrangement akin to a closed-shop preferential arrangement in the property and food delivery sectors, and ordered the separation of intermediation and retailing businesses where there was clearly a conflict of interest. 

While the findings were not entirely unexpected — some of these big players, such as Google, had been cited for similar conduct in other jurisdictions, including in Europe — it is the remedial actions that are decisively transformative.

The commission has ordered Google to ensure the visibility of smaller platforms on its search engines. It is required to provide credit to the tune of at least R180m to capacitate smaller SME  platforms,  improve its customer acquisition training and make a special dispensation for SME business users.

Takealot was ordered to cease its self-referencing, and similar remedial action was imposed on other intermediation platforms in the property, tourism, insurance and food delivery sectors.

Perhaps the most significant remedy was the recommendation for the creation of a fund that will specifically mobilise money for platforms owned by black entrepreneurs, particularly at the pre-revenue stage of the business as they seek to enter this market.

Essentially, the commission has throwing down the gauntlet to the authorities to put BEE rhetoric into action. This will significantly correct the balance of power and help level the playing field. 

In its recent annual conference, the commission related the challenges it had to navigate to conclude this market inquiry. The complexity and novelty of the industry meant the commission had to complete a steep learning curve to capacitate itself to understand the economics and dynamics of the industry.

The fact that the major players of interest are global companies with advanced technological capabilities and business models based on algorithms that are intricately interwoven in their operations indicates that while the commission may have won this battle, the war for digital hegemony has just begun.

In a country with annual economic growth of less than 1% and a 32% unemployment rate, 60% of the unemployed being young people, the tech and digital sector provides critical areas for growth.

While this inquiry report provides fascinating reading for all those concerned with economic transformation in general, and BEE in particular, its effect will be felt more if its findings and remedial recommendations are taken to their logical conclusion.

The commission has acquitted itself well. What remains is for the other role players, including black business, to take the project forward. 

• Mahlangu is chief economist at Amazwe Analytics & Advisory, and Matabane CEO of the Black Business Council.