The South African Competition Commission is embarking on a significant market inquiry, commencing on May 19, to scrutinize the operations of dominant e-commerce platforms within the country. This investigation aims to ascertain whether fair competition prevails among online market players, addressing a global trend where a few platforms often come to dominate online commerce due to inherent features of digital markets and the conduct of the platforms themselves.

The commission has articulated that under such circumstances, businesses utilizing these online marketplaces may face exploitation or discrimination, while consumers might not be presented with optimal choices. The probe will extend beyond food delivery services to encompass major e-retailers and business-to-consumer (B2C) platforms engaged in the sales of fast-moving consumer goods, various services, and software. Specific platforms named for investigation include food delivery rivals Uber Eats and Mr D Food, e-commerce giant Takealot, and travel platforms Airbnb and Travelstart.

A crucial aspect of this inquiry involves the definition of a dominant market operator in South Africa. Such an operator is typically characterized by holding at least 35-45% market share, or even less, but crucially possessing "market power." Market power implies the ability of an operator to independently set prices without significant influence from competitors, customers, or suppliers, thereby maximizing its own profits.

Uber Eats, with its substantial footprint in South Africa, qualifies as a dominant player, currently serving over 700,000 active monthly users. Its closest competitor, Mr D Food, serves more than 500,000 customers. The commission's scrutiny will delve into Uber Eats' operational model, particularly its commission structure and pricing strategies. For restaurants onboarded onto its platform, Uber Eats reportedly charges commissions as high as 30%, a figure notably higher than Mr D Food's average of 22%. This suggests that food businesses partnering with Uber Eats pay a higher premium compared to other food delivery services.

Furthermore, Uber Eats maintains the highest average price for food items ordered online, with an average of $5.19 per order. While this is marginally higher than Mr D Food's $5.11 average, Uber Eats distinguishes itself by also collecting a 5% service fee on each order, a practice not adopted by its primary competitor. Other rival food delivery applications, such as Orderin, operate with a comparatively lower average price per order, approximately $4.28, further highlighting Uber Eats' premium positioning.

Should the Competition Commission determine that Uber Eats is indeed hindering fair competition, the platform could face significant directives. These potential interventions might include being compelled to reduce its prices and provide competitors with access to essential operational facilities, such as dispatch vehicles and delivery boxes. Such measures would aim to incentivize rival operators by equipping them with more resources to meet customer demands effectively in their day-to-day operations.

The precedent for such strong actions exists; in December of the previous year, the commission instructed dominant telecommunications operators, MTN and Vodacom, to decrease their retail prices by at least 30% and up to 50% within a two-month timeframe. Uber Eats could, therefore, face a similar regulatory fate. While the commission affirms it does not seek to penalize successful operators, its overarching objective is to cultivate a fair and competitive online market environment where partner businesses are not subjected to exploitation.

Consequently, Uber Eats may be mandated to review and lower both its food prices and the commission rates it charges restaurant partners. This would invariably lead to food businesses paying less to utilize the platform. While Uber Eats might experience a modest reduction in service revenue, this potential loss could be mitigated or even offset by an increase in customer patronage if lower food prices stimulate greater demand. However, it is anticipated that Uber Eats would likely resist being forced into such concessions, which are designed to bolster competition from rival operators.