E-commerce limits under level four make no cents

By Cindy Leibowitz Professional Support Lawyer at Webber Wentzel

Johannesburg, 13 May 2020
Read time 3min 20sec
Cindy Leibowitz
Cindy Leibowitz

As the dust settles on another day in what most of the world calls our 'new normal', I hop online for yet another virtual grocery shop, thanks to COVID-19.

Since the start of the lockdown, those South Africans who have been fortunate enough to have access to technology have been able to purchase products that were listed as 'essential goods' in the disaster management regulations (regulations) from online stores, so as to avoid the obvious health risk posed to them from entering into brick and mortar stores. The list of essential goods that was included in the regulations was very limited, but on the whole, many South Africans accepted this as being the status quo.

Fast forward a few weeks; those regulations have been repealed and, for the duration of the current level four of the lockdown period, there is a peculiar provision in the new regulations which provides that "directions may permit the incremental expansion of e-commerce, taking into account the need to limit the extent of movement on the road, contact between people, law enforcement challenges and the impact on other businesses" (the e-Commerce Directive).

This has raised many questions, and in response, the Minister of Trade and Industry, Ebrahim Patel, has stated the reason for such incremental expansion of e-commerce is because, to allow unfettered e-commerce would be 'unfair competition' for other stores, such as spaza shops. This is an interesting response, and one which requires further legal analysis.

Section 22 of the Constitution of the Republic of South Africa, 1996 (Constitution) enshrines the right of freedom of trade, occupation and profession. In terms of this right, every person has the constitutional right to trade freely. Of course, this right may be limited by a law of general application, as provided for in terms of section 36 of the Constitution, if that limitation is reasonable and justifiable, taking into account various factors. The question is therefore whether the regulations (being the law of general application) are constitutionally sound, and more specifically, whether the limitations imposed on e-commerce are reasonable and justifiable, given the constitutionally enshrined right of each citizen, which includes online stores, to trade freely.

In considering the reasonableness and justifiability of the e-Commerce Directive, one of the factors that must be taken into consideration is the limitation of the right and its purpose. In this regard, as stated above, Minister Patel has indicated that the purpose for the limitation of the right is to ensure that there is no unfair competition. Perhaps the Minister, with respect, chose a somewhat inappropriate example of the type of store that would compete with an online retailer, as one could hardly conceive of an instance when a spaza shop would have the same target market as an online retailer.

There are other factors to be considered in balancing a right enshrined in the Bill of Rights in the Constitution (such as section 22), one of which is whether there are less restrictive means to achieve this purpose. Accordingly, given the very compelling health reasons for purchasing goods online, has the Minister of Trade and Industry fully considered whether there are less restrictive means at his disposal for opening up the e-commerce industry without unduly competing with brick and mortar stores? Another factor to consider is the importance of the limitation. In this instance, can it truly be said that protecting against unfair competition weighs more heavily than the health of consumers during this current global pandemic? If that is so, then why is our government going to such great lengths to protect the health of our people? 

Editorial contacts
Paula Youens (+27) 21 431 7039 Paula.Youens@webberwentzel.com