Takealot blasts order to split its businesses

Takealot is frustrated and disappointed with the outcome of the Competition Commission investigation into the e-commerce market, which calls for the company to split its marketplace and retail businesses.

Earlier this week, the commission, which launched an inquiry into the digital economy in May 2021, said that the separation is necessary to prevent Takealot from favouring its own products over those of third-party sellers and to create a level playing field for small and black-owned businesses.

Splitting the businesses would remove what inquiry chair and economist James Hodge described as “a conflict of interest” presented by its hybrid platform model.

“While we are supportive of the Competition Commission’s work around the market inquiry to protect [small, medium and micro enterprises] and consumers, we are disappointed with some of the commission’s findings in the final report which are incorrectly premised on the notion that Takealot and Mr D are ‘leading platforms’, when they compete in dynamic markets with much larger competitors in which consumers have considerable choice,” Takealot said in a statement.

Excluded

“For instance, takealot.com naturally competes with other, much larger brick-and-mortar retailers who have a sizeable and growing presence online but are excluded from complying with these requirements.”

Founded in 2011 and owned by Naspers, Takealot — made up of takealot.com, fashion outfit Superbalist and food delivery business Mr D Food — is the largest e-commerce business in SA. It accounts for about 2% of the overall retail market, which is dominated by brick-and-mortar outlets such as Shoprite and Mr Price.

“Equally, the same reality applies to Mr D, which is a very small contributor to any restaurant’s revenues,” it said.

The company has been ordered to hire separate senior management teams to oversee the divisions and to stop promoting its own products above those of third-party sellers.

Also, it can no longer enforce the rule that suppliers cannot sell goods at a lower price on their own websites.

The commission said that while Takealot operates a beneficial marketplace, it can do more to support black businesses joining the site by offering expertise and discounts.

The aim of the inquiry was to promote fair competition online and ensure small and black businesses can take part in the digital economy, which is dominated by large multinationals.

The report did not impose any measures on other online retailers that have physical stores, such as TFG, Checkers and Makro, or on foreign competitors such as Apple, Google, Booking.com and Shein, which the commission had initially targeted but later softened its stance on.

Global giants

Takealot and other affected parties have 20 days to challenge the report’s recommendations at the Competition Tribunal.

The company did not say whether it would do so.

Phuti Mahanyele-Dabengwa, CEO of Naspers’ SA operations, had previously argued during the inquiry that local platforms need to scale up to compete with global giants.

Takealot has successfully resisted Amazon’s entry into SA, while Mr D Food has competed with Uber Eats and Bolt.

gavazam@businesslive.co.za