E-commerce majors Amazon, Flipkart flouted antitrust laws: CCI probe

Competition regulator to soon share report with firms

A probe by the Competition Commission of India (CCI) director general (investigation) into a four-year-old case against Amazon and Flipkart has found the e-commerce majors in contravention of the antitrust laws, according to people in the know.

The report would soon be shared with parties involved, including the informant and the companies, followed by a hearing by the CCI, sources said.
 

The CCI did not respond to the query sent by Business Standard. Queries sent to Amazon and Flipkart remained unanswered until press time. However, according to the sources, the companies have not received any such notice or communication from the CCI yet.

 

The case relates to a 2019 complaint by the Delhi Vyapar Mahasangh alleging anti-competitive practices that led to the closure of business of lakhs of its members. It had also alleged that these players were giving deep discounts on online sales of smartphones and cherry-picking sellers. Other allegations included predatory pricing and exclusive partnerships.
 

In February, the Confederation of All India Traders (CAIT), the industry body for retail traders, urged the CCI to resolve the 

longstanding case involving alleged anti-competitive practices of the two e-commerce majors. “These foreign entities (Flipkart and Amazon) have indulged in the monopolisation of sales of mobile phones through an exclusive launch. Some entities/sellers were created just for the purpose of invoicing with the sole aim to sell the inventory of Flipkart/Amazon in the name of such entities/sellers,” wrote Praveen Khandelwal, national general secretary, CAIT, in a letter to the CCI.

In its order dated January 13, 2020, the CCI had initiated an investigation under Section 26(1) of the Competition Act, 2002.

The Commission had said: “It needs to be investigated whether the alleged exclusive arrangements, deep-discounting, and preferential listing by the OPs 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 DG report in its due course follows a long-established process while investigating anti-competitive allegations. Even in this case, it would be tough for a regulator to define the e-commerce space and establish anti-competitive allegations against marketplaces as it is a vibrant sector with multiple players,” said K Narasimhan, advocate, Madras High Court.

“If we apply current logic, then the Indian Premier League is colluding with Jio to air content on a single channel. The regulator thus far has remained objective and the same approach shall benefit a thriving economy like India,” said Narasimhan.

The All India Mobile Retailers Association (AIMRA), in a letter addressed to Ravneet Kaur, chairperson of the CCI, said the action taken by the regulator to identify and address malpractices within e-commerce platforms and the collusion with mobile phone manufacturers is crucial in preserving the integrity of the retail ecosystem.

The letter dated May 2 said the malpractices not only compromise consumer rights but also promote illegitimate business practices that ultimately hinder market cash flow and negatively impact exchequer revenue while also impacting legitimate businesses' ability to generate employment opportunities.

“As an Association, representing over 150,000 mobile retailers across India, AIMRA welcomes the CCI's efforts. We have faith that strict actions and penalties will be taken against violators to maintain a level playing field and fair competition,” said the letter sent by AIMRA founder chairman Kailash Lakhyani, a copy of which has been reviewed by Business Standard.

How the case unfolded

November 2019: Delhi Vyapar Mahasangh files complaint against Amazon and Flipkart for anticompetitive practices 
 

It alleges deep discounting, predatory pricing, and preferential listing by the two e-commerce firms

January 2020: CCI orders director general to investigate these issues

February 2024: CAIT writes to CCI, seeking urgent resolution of the matter