Food delivery platform Bolt Food expects the Competition Commission's recommendations that include preventing restaurant chains from restricting their franchisees from listing on local delivery platforms of their choice, to help the company expand its offering to a wider audience.
This week, the commission released a report on online services which imposed a raft of remedial actions to give greater visibility and opportunities to small South African digital businesses.
The commission said it had reason to believe there are market features of online intermediation platforms that may impede, distort or restrict competition and instructed some companies, such Uber Eats, Mr D Food, Takealot, Property24, AutoTrader, Bolt and Google, to change their business practices.
Tafadzwa Samushonga, country manager for Bolt Food South Africa, said the company was pleased with the recommendations that address concerns about practices that restrict smaller delivery services from attracting big restaurants, thus limiting their growth.
The commission found that local food delivery platforms competing with Uber Eats and Mr D Foods have faced restrictions on restaurant franchisees listing with them and are disadvantaged by the lack of transparency on menu surcharges on and across platforms.
Independent restaurants lack negotiating power with Uber Eats and Mr D Food, resulting in higher commission fees than restaurant chains, forcing them to push up the prices they charge customers, the commission said.
It said restaurant chains are no longer allowed to restrict their franchisees from listing on local delivery platforms of their choice.
Uber Eats and Mr D Food, owned by Takealot Group, must also offer lower commission fees and improved value for independent restaurants. Mr D Food must implement a promotional rebate on the commission fee which can be used for discounts and promotions on Mr D Food, along with advertising credits, the report said.
To address the lack of transparency, Uber Eats and Mr D Food are required to notify consumers through a pop-up message periodically that they charge restaurants a commission fee for their service, and that restaurant in-store pricing may differ from the prices they charge on their service.
Takealot Group is disappointed with some of the findings in the final report
— Takealot Group
Samushonga said: “We are encouraged by the commission’s recommendations that expressly confirm that franchises must not be restricted from using food delivery platforms, and we believe this will provide improved options for both consumers and restaurant providers across the country. We are optimistic that these recommendations will have a positive impact on businesses such as ours as they will allow us to expand our offering to a wider audience, offering them a wider selection of restaurants on our app.”
Bolt Food was instructed to remove wide pricing parity to ensure fair pricing. The commission found that such clauses adversely affect competition with local delivery platforms.
Samushonga said the remedial actions “will require minor adjustments to our terms and conditions as they relate to pricing parity, which was discussed during our public hearings with the market inquiry team, and with which we have agreed to comply.”
Bolt Food will not be taking the report on review.
Samushonga said the company is “encouraged that a number of our comments regarding the online food delivery sector have made their way into the final report. We have highlighted the need to create further opportunities in the market and to allow franchisees, in particular, to make choices directly regarding onboarding food delivery platforms.”
But other companies that have been ordered by the commission to tweak some business practices are keeping mum about whether they will challenge the report. Uber Eats said it was “assessing before deciding” what, if any, steps it would take.
Takealot, which was also heavily criticised by the commission, said it “will carefully consider the final report and take the necessary steps to ensure our businesses are able to effectively compete and grow, and that inclusive economic growth becomes a reality”.
The commission found Takealot Group, a subsidiary of Naspers, faces a conflict of interest on its site as its own retail division competes with other sellers, and this has led to behaviour that has disadvantaged those sellers. It was instructed to segregate its retail division from its marketplace operations, preventing its retail services from accessing marketplace seller data and unilaterally stopping marketplace sellers from competing for certain brands.
The commission found that the business model provides additional restrictions to the participation of historically disadvantaged businesses. One example is that onboarding favours established businesses along with other promotional features.
To address this distortion, Takealot is to implement a programme for historically disadvantaged people (HDPs) which provides personalised onboarding, the waiver of subscription fees for the first three months, and at least R2,000 advertising credit for use in the first three months. It must also offer promotional rebates and the inclusion of HDPs in HDP-specific campaigns on the platform, and a programme that supports black females, youth and rural enterprises with business mentoring and funding support.
Takealot Group said it “is 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”.
The group said Takealot.com competes with other, much larger, brick and mortar retailers that have a sizeable and growing presence online but are excluded from complying with these requirements.
Takealot.com also forms a small part, less than 2%, of the overall retail market in South Africa. The same reality applies to Mr D Food, which is a small contributor to any restaurant’s revenues, the group said.
Other companies mentioned in the report, Property24 and AutoTrader, part of Naspers, and Google said they were reviewing the report.
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