Media release: Competition Commission punishes successful businesses

The FMF has submitted its opposition to the provisional recommendations contained in the provisional report of the Online Intermediation Platforms Market Inquiry. The report summarised the findings of the market inquiry which investigated the claimed monopoly of Google search, leading intermediation platforms in the travel and accommodation sector, eCommerce (Takealot), online food delivery (Uber Eats and Mr Delivery), and software application stores. The recommendations in the report seek to institute more regulations on the country’s economy by punishing leading enterprises for being successful. 

The FMF views the recommendations as a continuation of the Competition Commission’s misguided activities which serve to punish successful businesses that acquired their market position through voluntary transactions which satisfied consumer preferences. The potential for competition from new entrants or other not as successful competitors is there for these companies, yet they are being sanctioned.

The barring of contractual terms which were agreed to in the market like price parity clauses, a recommendation of the report, undermines the freedom to contract central to any market economy. The barring of self-preferencing violates property rights and amounts to making it illegal for businesses to use their resources to favour themselves and their interests in the market. All of this is opposed by the FMF. 

The economic social engineering proposed by the report will see Historically Disadvantaged Persons (HDPs) being given preferential treatment by the companies which were subject of the market inquiry represents a worrying trend in the Commission’s work, taking its cue from legislation. The FMF is of the view that any change in market dynamics must be spearheaded by the market itself, this includes the demographic transformation of that market. The aim ought to be making sure that the institution of private property is protected, and valid contracts enforced. Forcing private companies to associate or give preference to HDPs is an egregious intervention in market processes.

With the South African economy experiencing record high unemployment levels and dim growth prospects, making it harder to do business in the country, which is what the implementation of these recommendations will do, should not be a course of action we pursue. As such, the recommendations of the Online Intermediation Market Inquiry provisional report should be opposed.

The FMF’s submission can be read HERE.

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