26 July 2021
The Australian Competition and Consumer Commission (ACCC) has announced that the next digital sector it will investigate as part of its five year Digital Platform Services Inquiry is the provision of online retail marketplaces.
Unless the Government decides to extend his appointment, Rod Sims, the Chair of the ACCC, has only 12 months left in that role. It has been reported in the media that one of the key goals he wants to achieve in that period is to reform digital markets. Following on from the success over the past year of the Mandatory News Media Bargaining Code, which has led to Google and Facebook, for the first time, agreeing to pay Australian media companies for use of their news content, the ACCC Chair has stated that he believes reform is required in relation to, at least, app marketplaces, the online search market and the advertising technology (or adtech) market.
In late July 2021 the ACCC announced that, over the next six months, it will look at potential competition and consumer issues in the provision of general online retail marketplaces under the broad scope of the ACCC’s 2020-2025 Digital Platform Services Inquiry. The findings of this six month Inquiry may mean that online retail marketplaces are added to Mr Sims’ list of digital markets where competition and consumer protection reform is considered to be required.
The ACCC is not looking at online retail sales generally – that is, the sale by traditional retailers from their own websites is outside the scope of the ACCC’s investigation. The ACCC will also not look at specialist marketplaces that sell only a particular type of goods, such as clothing or classified sites, such as Gumtree. Instead what the ACCC is looking at is websites that offer a broad range of products from a large range of different brands. Like a “real world” department store, these websites provide consumers with the ability to browse a range of different products, at different price points. Third party sellers, particularly smaller retailers, benefit from these marketplaces as they obtain access to a broader range of consumers than would visit a retailer’s own website, for which those retailers pay a fee to the marketplace equal to a percentage of their sales. The online retail marketplace may also offer retailers other services, such as logistics services relating to the delivery of their products, for which those retailers pay additional fees.
Unsurprisingly, during pandemic lockdowns in Australia, there has been a surge in online shopping. The ACCC’s Issues Paper for the online retail marketplaces Inquiry notes that non-food online sales comprised 14.2% of total non-food sales in May 2021 compared to 10.9% in February 2020.
In Australia, the most popular examples of general online retail marketplaces are:
Of course, these are not the only general online retail marketplaces in Australia and other marketplaces, such as MyDeal, will also be considered in this six month Inquiry.
Broadly the areas of concern to the ACCC that will be considered in the Inquiry may be placed in three different categories:
In the area of digital services, the ACCC has worked very closely with regulators in other jurisdictions, including the UK’s Competition & Markets Authority and the German Bundeskartellamt. For example in April 2021, these three regulators released a joint statement in relation to merger enforcement, which had a particular focus on concerns regarding the competition impacts of acquisitions of nascent competitors in highly concentrated markets, such as digital markets.
However, in looking at online retail marketplaces, the ACCC is one step behind regulators in other jurisdictions. For example:
The reason why the ACCC has been slower to consider online retail marketplaces is likely to be that the ACCC has focussed to date on other digital markets issues seen as of critical importance. In turning attention to marketplaces, the ACCC has recognised the benefits to consumers that online retail marketplaces provide. Nonetheless, Mr Sims has noted that the ACCC “… would expect the marketplace to operate fairly for businesses and consumers alike and comply with consumer laws and competition laws”.
The ACCC is seeking stakeholder input on its Issues Paper by 19 August 2021.
Author: Angela Flannery
 See article by The Australian
 See page 6 of the ACCC's Issues Paper
 This data is from pages 8 and 9 of the ACCC’s Issues Paper
 See the ACCC’s media release
 See the ACCC’s media release
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