The public participation part of the Competition Commission’s inquiry into the competitive practices of online marketplaces kicked off with a vengeance this week.  

Presentations from the South African Venture Capital Association, Huawei, and assorted software developers seemed to be scene-setters. It was the polite, but relentless grilling of Naspers SA CEO Phuthi Mahanyele-Dabengwa that suggested the commission is determined to look under every stone when it comes to understanding the linkages between the big and small companies in the South African online ecosystem. 

If readers were unaware, the Online Intermediation Platforms Market Inquiry was initiated in May and aims to look at the pricing practices, commission and discount models of business-to-consumer platforms including online marketplaces, delivery platforms, travel and accommodation platforms, online classifieds and app stores. The intention is to uncover features that may restrict platform competition or undermine the fair treatment of the businesses that use these platforms to list and sell products. 

By June, the first round of information gathering was completed and the commission released an initial Statement of Issues, followed in August by a revised statement. 

The public leg of the inquiry continues until 18 November and can be followed on the commission’s YouTube channel.

James Hodge, chair of the inquiry and acting deputy commissioner, went to great lengths to understand what oversight role Naspers, as a sizeable holding company and significant e-commerce player in SA, plays in the companies in which it invests. Specifically, he was referring to the likes of  Takealot, OLX, Mr D and Superbalist, though Naspers is also invested in eight smaller online businesses through its venture capital business, Naspers Foundry. 

“There is a global debate around the tech industry, and some of the practices within it, as well as the degree of inequity and the relationships between the platforms and their users… where are the lines of ethics drawn?” he wanted to know.

“These are issues that we consistently look at,” replied Naspers SA CEO Mahanyele-Dabengwa. “For instance, our businesses are hyper-local and data is decentralised. Takealot would not have access to the data of [the Dutch domain online marketplace] OLX for instance.” 

But Hodge was less interested in the relationships between operating companies and more interested in the practices and pricing within specific companies. What he was really asking was, can platforms bully the third-party suppliers that use the platform to market their goods? And if this was the case, would Naspers know about it?

“It’s about consumers, but it’s also about the business users in the ecosystem. So we’d like to protect the small business, and their equitable ability to transact. It’s not just the consumer interest, it’s not just one category,” he said.

“We have a number of small companies that have been able to develop on the Takealot platform,” replied Mahanyele-Dabengwa. One of these is the black female-led Masodi Organics, which has established a thriving business selling organic beauty treatments on the Takealot platform. 

“We are ensuring all of the participants engage in a fair and responsible way, in a way that is meaningful to them,” Mahanyele-Dabengwa added. 

Yet, why was it that Takealot contested the right of this inquiry to examine its relationship with the sellers on its platform, Hodge wanted to know. And why was it that small sellers were reluctant to appear before the inquiry because they feared victimisation by the platforms? 

Mahanyele-Dabengwa was appalled by the latter allegation. “I’m not aware of that behaviour. We do not have that culture and it would concern me if it was so. But I cannot comment further without gathering some information.” 

The CEO of Takealot, Kim Reid, who would appear before the commission next week, was best placed to answer, she said.

“I would like an assurance from you that there will be no intimidation and retaliation of small suppliers. To be interfering with an investigation or inquiry process is serious, it undermines the process,” Hodge said.

At this point, Naspers’s legal council, Daryl Dingley, a partner with Weber Wentzel, stepped in. 

“You are putting us on the spot. We are not aware of this, and now we are required to provide an undertaking. That almost assumes our guilt. If you make an allegation, please provide more information,” he said. 

Hodge moved on to ask questions about the sharing of knowledge and “playbooks”, about scale and scaling-up businesses, and about funding and ultimately about BEE funding. 

“If there is sizeable growth in funding there must surely be casualties in businesses that don’t have the backing,” he said. 

“Well, that is the nature of the market. We try to ensure that the businesses we are supporting are sustainable,” replied Mahanyele-Dabengwa.

This question segued into a long discussion about whether Naspers, through its Foundry, its township incubators, its support for the SA SMME Fund, and its bursary programme, was doing enough to support the growth of black tech entrepreneurs in the country.

This was not the way Mahanyele-Dabengwa expected the conversation to go. In a discussion with Business Maverick ahead of the inquiry, she was cautiously optimistic. 

“We are hoping for a positive discussion,” she said. “We want a regulatory environment that is conducive to investment in the sector. We want an environment that can grow.” 

South Africa, she added, lagged behind Egypt, Nigeria, and Kenya when it came to investment in the tech sector. 

Naspers was aware of SA’s competition law and its requirements, she said. “But when you look at the market, we are so far from being a dominant player. Brick-and-mortar retailers have been slow to invest in e-commerce, but that is rapidly changing.” 

From the line of inquiry over the past day and a half, it seems the subject of traditional retailers and the speed at which they are moving online is not of concern.

“They are just looking at the incumbents, not at who is coming into the space,” said Dingley. 

At the heart of this is the belief that there are problems with the online environment, that the market is not working properly and intervention is required. 

“We will do our best to educate the commission,” said Dingley. 

“If we don’t, there could be serious consequences. These market inquiries are empowered to make findings and policy recommendations which can find their way into law.”

After the public hearings, further investigations will be held, with a final report expected only in November 2023. DM/BM