Naspers-owned Takealot has fired back at the Competition Commission’s findings and strict conditions, saying it only has a tiny fraction of the market as it has to compete with far larger brick-and-mortar retailers that also have an online presence.
The restrictions formed part of the Competition Commission’s Online Intermediation Platforms Market Inquiry Report, which was released on Monday.
The Commission said Takealot is the clear eCommerce market leader with a dominant share of overall online sales in South Africa.
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, preventing them from reducing their dependency on the eCommerce giant.
The Competition Commission found that this clause distorts South Africa’s eCommerce market competition and required Takealot to remove it and inform all marketplace sellers on its platform.
While Takealot opens its online marketplace to third-party sellers, it also trades extensively 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.
To address these distortions, the commission said Takealot must segregate its retail division from its marketplace operations.
The company must also 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’ returns and stock loss complaints.
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.
“We are disappointed with some of the commission’s findings in the final report, which are incorrectly premised on the notion that Takealot and Mr D are ‘leading platforms’ when they compete in dynamic markets,” the company said in a statement.
The online retailer naturally competes with other, much larger brick-and-mortar retailers, who are excluded from complying with these requirements despite them also having an online presence.
The report did not impose any measures on other online retailers that have physical stores, such as The Foschini Group, Checkers and Makro.
“Takealot.com also forms a small part – less than 2% – of the overall retail market in South Africa. Equally, the same reality applies to Mr D, which is a very small contributor to any restaurant’s revenues.”
Some of its online competitors, which are not named in the report – Shein, Wish and AliExpress – are making massive inroads in the South African market.
These companies operated outside of local consumer protection laws without a physical presence in the country and not paying tax, but pose a significant competitive threat.
Takealot and other affected parties have 20 days to challenge the report’s recommendations at the Competition Tribunal.
The company did not say whether they would exercise this option.