The Competition Commission of India (CCI) on Monday ordered a probe into alleged competition law violations by Amazon and Walmart Inc.-owned Flipkart over allegations that the e-commerce majors promoted and gave discounts to ‘preferred’ sellers, entered into exclusive partnerships with smartphone brands and abused their dominant position.
CCI noted four alleged practices on both the marketplaces—exclusive launch of mobile phones, preferred sellers on the platforms, deep discounting and preferential promotion of private labels.
The anti-trust body said such exclusive arrangements between smartphone or mobile phone brands and e-commerce platforms or select companies selling exclusively on either of the platforms merits an investigation.
“…It needs to be investigated whether the alleged exclusive arrangements, deep-discounting and preferential listing by the OPs (opposite parties) are being used as an exclusionary tactic to foreclose competition and are resulting in an appreciable adverse effect on competition contravening the provisions of Section 3 (1) read with Section 3(4) of the Act,” the CCI order stated.
CCI has directed its director general to complete the investigation and submit the report in two months from the receipt of the order.
The order for investigation however doesn’t come entirely as a surprise—CCI issued a warning on Saturday to dominant e-commerce platforms that they could face an investigation into charges of opaque behaviour and unfair practices such as exclusive tie-ups with certain sellers on items like mobile phones if they do not refrain from these practices.
A Flipkart spokesperson said: “We are currently reviewing the document. The Flipkart group is fully compliant with all applicable laws and FDI (foreign direct investment) regulations. We take pride in democratising e-commerce in India and giving market access to lakhs of MSMEs (micro small and medium enterprises), sellers, artisans and small businesses, making quality and affordable goods available to consumers through our transparent and efficient marketplace while creating lakhs of jobs.”
CCI’s order comes ahead of Amazon founder Jeff Bezos’ visit to India this week.
An Amazon spokesperson said, “We welcome the opportunity to address allegations made about Amazon; we are confident in our compliance, and will cooperate fully with CCI”.
Fashion and smartphones have been the two top sellers for e-commerce firms. In September, Amazon.in said it sold premium smartphones worth s 750 crore within 36 hours of the start of its festive sale.
On January 15, when Bezos visits, more than 500,000 traders are expected to stage protests across India over predatory pricing, hefty discounts and exclusivity given by e-tailers and to tell them to comply with FDI guidelines in e-commerce, Mint reported on Monday.
Praveen Khandelwal, secretary general, Confederation of All India Traders (CAIT), said CCI’s order was long-awaited by traders.
“…Both Amazon and Flipkart have left no stone unturned in destroying the e-commerce and retail trade market by indulging into all kinds of malpractices including causing huge GST (goods and services tax) and income tax revenue loss to the government. Their business model has resulted into closure of thousands of shops in the country in the last three months,” he said.
