The Competition Commission has imposed numerous strict conditions on Naspers’ local eCommerce powerhouse, Takealot, which will significantly influence its current operations.
These restrictions formed part of the Competition Commission’s Online Intermediation Platforms Market Inquiry Report, released Monday.
The Competition Commission said Takealot is the clear eCommerce market leader with a dominant share of overall online sales in South Africa.
Takealot has an even stronger position in providing online marketplace services to sellers. This is where businesses can trade within the Takealot platform.
Smaller businesses wishing to trade on online marketplaces in South Africa are highly dependent on Takealot.
Takealot imposes ‘narrow price parity’ on sellers, preventing them from pricing lower on their own websites.
It, therefore, prevents them from reducing their dependency on Takealot by developing this alternative online channel.
The Competition Commission found that Takealot’s narrow price parity clause distorts South Africa’s eCommerce market competition.
As such, it required Takealot to remove this clause and inform all marketplace sellers on its platform.
Whilst Takealot opens its online marketplace to third-party sellers, it also trades extensively itself through the Takealot Retail division.
This creates a conflict of interest as it sets the rules for the marketplace and, at the same time, competes with the marketplace sellers.
Takealot has incentives to favour itself, and its retail buyers have strong incentives to tilt the balance in their favour.
Competition Commission requirements
To address these distortions arising from the conflict of interest, the Competition Commission said Takealot must segregate its retail division from its marketplace operations.
This is also needed to prevent its retail services from accessing seller data and unilaterally stopping sellers from competing for certain brands.
Takealot must further extend its employee code of conduct and create an independent complaints channel to include contraventions based on unfairly harming marketplace sellers.
In addition, Takealot must introduce a 60-day dispute resolution process for marketplace sellers’ complaints on returns and stock loss.
If these disputes are not resolved within 60 days, they will be deemed resolved in favour of the marketplace seller.
Takealot’s Buy Box must also be re-engineered to reflect the cheapest and fastest options for the consumer.
The Competition Commission further found that the eCommerce business model restricts historically disadvantaged businesses from effectively competing in the market.
To address this distortion, Takealot is to implement an HDP Programme that provides:
- Personalised onboarding, the waiver of subscription fees for the first three months and at least R2,000 advertising credit for use in the first three months,
- Offering promotional rebates and the inclusion of HDPs in HDP-specific campaigns on the platform, and
- A programme to specifically support targeted groups within HDPs such as female, youth and rural enterprises with business mentoring and funding support.
The Competition Commission said that during its inquiry, rumours have persisted about the entry of Amazon.
“Whilst it has not entered South Africa, were it or any other large eCommerce player to do so, they will similarly be expected to comply with similar provisions as set out for Takealot,” it said.