Naspers addresses anti-competitive practice concerns

Read time 5min 10sec

Naspers Group, which owns Takealot, says it will ensure its online businesses fully comply with SA’s Competition Act.

The global internet giant, which has been accused of conglomeration, says while SA has an existing comprehensive competition law framework that is sufficient for regulating digital markets, there is a need for greater understanding of the dynamic and innovative nature of digital markets in the country.

Representatives from Naspers were among the participants in this week’s public hearings on the online platforms market inquiry conducted by the Competition Commission (CompCom), to help promote fair competition and combat alleged manipulation and exploitation in the e-commerce sector.

In May, the CompCom officially commenced with its investigation into online platforms in SA. The inquiry focuses on digital platforms with intermediate online transactions between business and consumers, with the scope covering e-commerce players, infrastructure developers, fintech players and payment platforms.

According to the commission, there are reasons to believe there are market features, or a combination of features, that impede or restrict competition among online platforms, and these may undermine the purpose of the Competition Act.

The CompCom published an initial paper for public comment at the end of last year. It noted the local digital platforms industry is rapidly becoming concentrated, and there are many tactics and exploitation methods used to ensure dominance by market leaders.

In the paper, the competition watchdog highlighted concerns that conglomeration may be used to gain an unfair advantage over rivals. It said that for instance, Takealot, as the largest e-commerce platform with a large marketplace in SA, faces this potential conflict of interest by selling products, and also offering a marketplace as a platform for other businesses to offer products.

Other dominant players in the market include AirBnB, AutoTrader, UberEats, Mr D Food and Property24 – brands managed and controlled by only a few large companies that are accused of monopoly.

Giving a presentation at the hearing, Phuthi Mahanyele-Dabengwa, South Africa CEO for Naspers, pointed out the group is committed to the development of a policy that is in the best interest of all stakeholders.

However, she noted that a careful balance must be struck between promoting healthy competition and investments in SA’s tech sector.

“Naspers is looking to see that all its businesses comply with competition laws and follow certain ethical practices. As a group, we are certainly working to ensure that, for instance, from Takealot management there is correct implementation of policies and consistent overview of what is required of them in terms of adhering to competition laws.

“Naspers’s investment in SA and its building of sustainable ecosystems in which innovation can thrive resulted in multiple South African success stories, leading to job creation, consumer welfare and efficiencies,” she commented.

Phuthi Mahanyele-Dabengwa, South Africa CEO, Naspers.
Phuthi Mahanyele-Dabengwa, South Africa CEO, Naspers.

According to Mahanyele-Dabengwa, SA needs a policy that is fit for the fourth industrial revolution and adopting a ‘one size fits all’ approach to regulation is not appropriate.

“Naspers is committed to being part of providing local solutions to creating an enabling environment for growing the technology space. Restrictive policies in the technology sector that hinder investments may reduce the diversity of beneficiaries successfully securing early stage investment.”

Wide-ranging digital businesses

Naspers is a 107-year-old JSE-listed company, which owns a 56.92% stake in Dutch multinational conglomerate Prosus and wholly-owns Media24 (Africa's largest publishing company), (South Africa's largest online retailer) and Naspers Foundry, a South African-focused venture capital fund.

Since its $32 million investment in Tencent in 2001, Naspers became an investor in a number of other consumer internet businesses, including OLX (e-commerce), PayU (fintech), Codecademy (edtech) and food delivery services iFood and Mr D Food.

Addressing Naspers’s dominance in the market, Mahanyele-Dabengwa pointed out the company is of the view that a successful ecosystem is one where society plays a role and everyone benefits, because ecosystems have the potential to be inclusive and non-exclusionary.

“Developing an ecosystem is important in order to compete with large global ecosystems; however, Naspers’s business units within SA do not operate as an ecosystem. For instance, Takealot and OLX do not form part of an ecosystem and are distinct entities.

“To this end, Takealot and OLX have different reporting lines and oversight structures within the Naspers group. Naspers’s contribution to the South African economy has been significant, from shareholder support, to backing of tech companies.

“Throughout the COVID-19 pandemic, Mr D Food has contributed to the sustainability of restaurants through food deliveries in a safe manner, while Takealot has enabled consumers to procure goods safely.”

Among other issues raised in the CompCom’s initial paper are concerns from third-party sellers on the Takealot Marketplace, which sent complaints to the commission regarding the e-commerce site’s alleged unfair competition practices.

The competition watchdog expressed concerns around Takealot competing with small businesses on its platform, gaining unfair advantage over smaller competitors, while increasing barriers to entry for smaller operators that have something to offer local consumers.

Responding to these concerns, Mahanyele-Dabengwa pointed out: “These are the issues that we have been consistently thinking of; we are very much conscious of ensuring all of the participants on our platforms are engaging in a responsible manner that is meaningful to them as a business.

“We have not been made aware of complaints directed to the Competition Commission; however, we believe sellers need to share their views with the commission and we believe in having a fair playing field. Our underlying premise is to support small businesses and Takealot management are continuously focused on ensuring they are focused on doing just that.”

See also