The Competition Commission wants to punish leading enterprises in the digital space for being successful, the Free Market Foundation (FMF) said on Thursday.

The foundation has made a submission opposing the provisional recommendations made in the commission’s “online intermediation platforms market inquiry”.

TechCentral reported last month that the commission has proposed, among other measures, imposing radical changes to Google’s search results in South Africa that go to the heart of the US Internet giant’s business model.

This includes forcing Google to make it much clearer to South African Internet users which search results are paid for and even possibly ending its status as the default search engine on smartphones sold in the country.

The report also made a number of provisional findings relating to platforms in travel and accommodation; e-commerce (with specific reference to Takealot); online food delivery (Uber Eats and Mr D Food); and software application stores from Apple and Google.

“The recommendations in the report seek to institute more regulations on the country’s economy by punishing leading enterprises for being successful,” the FMF said in a statement about its submission to the Competition Commission.

“The FMF views the recommendations as a continuation of the commission’s misguided activities that serve to punish successful businesses that acquired their market position through voluntary transactions that 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,” it said.

Property rights

“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, which is 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.

“The economic social engineering proposed by the report will see historically disadvantaged persons (HDPs) being given preferential treatment by the companies that were subject of the market inquiry represents a worrying trend in the commission’s work, taking its cue from legislation. 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 said. – © 2022 NewsCentral Media