Warning to CompCom: Hands off digital marketplace, says Small Business Institute

Don’t fix what’s not broken, says the Small Business Institute that has come out strongly against plans by the Competition Commission to investigate large players in the online economy with the intention of regulating South Africa’s nascent digital marketplace. The timing of such a move could not have come at a worse time, says the institute – pointing to the deprivations of the Covid-lockdown and “an economically-destructive decision by government to forbid most e-commerce and online sales”. – Derek Alberts

The Small Business Institute (SBI) has told the Competition Commission (CompCom) to stay out of the digital marketplace and instead direct its regulatory attention to other priorities to enable a more competitive environment.

The SBI’s rebuke follows comments from commissioner Tembinkosi Bonakele at a conference that online marketplace Takealot and other major players were in the sights of the commission for an investigation for “proactive abuse of dominance”.

Speaking at 14th Annual Competition Law, Economics and Policy Conference, Bonakele said the investigation was a “proactive approach to determine any potential abuse of dominance before it manifested”.

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Bonakele also referred to the newly-launched Competition in the Digital Economy report that outlines the CompCom’s strategy of directing the country’s competition laws to achieve “equitable outcomes in the digital economy … (and) that the commission is of the opinion that the digital economy is threatening to further marginalise vulnerable businesses, making regulation critical”.

But the SBI took a dim view of the commissioner’s comments and said the timing of his suggestion could not be worse in the wake of the Covid-induced lockdown and “an economically-destructive decision by government to forbid most e-commerce and online sales”.

Besides, said SBI CEO John Dludlu, online marketplaces represent a real opportunity for South African SMMEs to trade.

“They also make it easy by handling payments and logistics and removing the requirement for a small business without the right skills or infrastructure to set up their own Web sites and distribution channels, let alone to access a wider – even regional or international – market,” he said.

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According to the institute, the UN Africa Marketplace Explorer pointed out that dominant players face considerable competition and that the world’s largest marketplaces do not have a strong presence in Africa. It also said that Gumtree was the biggest marketplace in both southern Africa and South Africa.

The SBI said the domestic sphere is vibrant with more than 100 online marketplaces, of which 80% are SA-owned.

Instead of fixing what is not wrong, the CompCom should focus on the priorities that would build an empowering environment, said the SBI. These include extending the footprint and lowering the costs for broadband, enhancing computer skills training, and investing in national research and development.