South African fintech and other online participants, big and small, were soon likely to be asked by the competition authorities about their views of dominant players on the internet possibly squashing competition and innovation of smaller participants. Picture: African News Agency (ANA)
South African fintech and other online participants, big and small, were soon likely to be asked by the competition authorities about their views of dominant players on the internet possibly squashing competition and innovation of smaller participants. Picture: African News Agency (ANA)

Breaking ground on competition on the internet

By Edward West Time of article published Apr 6, 2021

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CAPE TOWN - SOUTH African fintech and other online participants, big and small, were soon likely to be asked by the competition authorities about their views of dominant players on the internet possibly squashing competition and innovation of smaller participants.

The Competition Commission last September said it would launch an inquiry into digital markets, and this would probably have taken place sooner if it had not been for the Covid-19 pandemic, Andersen director Anthony Crane said in an interview.

Although the pandemic has done much to increase the use of digital services, there were concerns that some established players have been able to consolidate their lead, with the risk that smaller players were relegated to the sidelines, if not pushed out of business.

Crane said some felt that, as as a new frontier, South Africa’s digital marketplace was in need of proactive regulation to ensure that smaller but innovative businesses could grow, but, on the other hand, there were concerns about the risk that regulation would stifle internet-driven rapid development in technology and digital services.

The question of competition on the internet, and the advantages of big groups over small companies participating on the internet, was complex, and, at present, similar inquiries were under way by the competition authorities in India and Australia, said Crane.

For instance, large companies could dominate their respective online markets by affording to pay more money to platforms such as Google and Facebook to push their products first in online searches, which could be at the expense of innovations and development among smaller companies, and which could also present problems associated with market dominance from a competition point of view, he said.

In addition, big companies with a strong market presence on the internet would have access to substantially more information about their markets and customers than would a smaller company that was entering the market, again raising issues of market dominance.

On the other hand, in terms of existing competition laws, the large participants on the internet were already held to a higher standard of conduct in the market, and, no doubt, the inquiry would question whether this was enough, or whether other guidelines were required.

Crane said competition guidelines to address these issues in the future might, for example, specify that large internet platforms provided advertising of one dominant company in conjunction with providing data of a smaller competitor, differentiated by their levels of turnover.

He said if any changes were made, they should be designed to continue to provide smaller companies with a toe-hold in the market space.

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