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Competition Commission demands changes to Takealot

  • The Competition Commission is releasing its latest report on digital businesses operating in South Africa on Monday.
  • It says that Takealot engages in anti-competition behaviour and has recommended a set of changes that the etailer must undertake.
  • These include stopping its practice of “product gating,” its employment of narrow price parity and splitting its ecommerce market and retail division.

South Africa’s Competition Commission is releasing its latest report on digital businesses on Monday, and in a media briefing streamed online detailed how ecommerce platform Takealot is the clear leader in its industry, saying how the platform dominates South Africa’s online sales.

The commission is taking different online platforms to task, including Google and Booking.com and said that Takealot does impose what it calls “narrow price parity,” anti-competition behaviour often seen in online booking platforms, which “prevents marketplace sellers from pricing lower on their own direct channels.”

“Much like Booking.com, we require that Takealot removes this clause and informs its marketplace sellers of that,” explains Commission chief economist James Hodge.

“While Takealot does operate a beneficial marketplace for thousands of sellers it also trades extensively itself through Takealot retailer and this does create a conflict of interest, much in the same way as Google and globally with Amazon,” it explained.

It adds that it has found a range of measures that are to be taken by Takealot in order to address what it calls a “real” conflict of interest.

These are:

  • Takealot must segregate its retailer division from its marketplace operations and appoint different executives for both roles,
  • Prevent its retailer division and services from accessing seller data that provides an advantage against competitors,
  • Cease the practice of “product gating” where Takealot ensures that certain products can only be sold by it on the platform without consent from suppliers,
  • It must extend its employee code of conduct and “speak up” policy for marketplace sellers that includes exposing conduct that harms sellers and unfairly restricts them from competing,
  • Resolve ongoing complaints in terms of returns and stock loss in favour of marketplace sellers – within 60 days,
  • And finally, Takealot is now required to not only offer the fastest delivered product via “buy box” but now also the cheapest.

The commission says on the rumours that Amazon has entered the South African market – that it has not done so – but if it ever does, it is recommended to adhere to similar conditions as those levied at Takealot.

Since these demands will be included in the report that will be published officially later today, Takealot has not had a chance to reply to the commission.

The ecommerce platform had a grim first half of the year, according to the latest financial results from owner Naspers

In the first few months of 2023, Takealots saw an operating loss of $22 million, representing trading margins of less than 3 percent. Naspers blamed this loss on slowing consumer demand, and rising inflation and interest rates.

It also said that loadshedding and wide-ranging hikes to fuel affected profitability.

Despite this, Takealot’s food delivery arm Mr D saw its own revenues climb up to 17 percent.

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