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CCI initiates probe against Flipkart, Amazon on ‘deep discounting’

The anti-trust body ordered the probe on a complaint by Delhi Vyapar Mahasangh, a micro, small and medium scale enterprise body.

Written by Aashish Aryan | New Delhi |
January 14, 2020 3:54:01 am
CCI probe against Flipkart, CCI probe against Amazon, Amazon deep discounting case, Flipkart deep discounting case Home-grown retailer Flipkart in its statement said it was fully compliant with “all applicable laws and foreign direct investment regulations” and that it was focusing on making quality and affordable goods available through its “transparent and efficient marketplace”.

The Competition Commission of India (CCI) on Monday ordered an investigation into alleged malpractices by Flipkart and Amazon India as far as the issue of deep discounting and practice of preferred sellers of mobile phones by both the retailers was concerned.

The anti-trust body ordered the probe on a complaint by Delhi Vyapar Mahasangh, a micro, small and medium scale enterprise (MSME) body, which alleged that both the retailers were engaged in deep discounting and preferred selling of mobile phones and related accessories “which have led to a foreclosure of other non-preferred traders or sellers from these online marketplaces”.

“Amazon with their preferred sellers on the platforms leads to a foreclosure of other non-preferred sellers from the online marketplace. These preferred sellers are also alleged to be affiliated with or controlled by Flipkart/Amazon either directly or indirectly,” the MSME body had said in its complaint to the CCI.

Home-grown retailer Flipkart in its statement said it was fully compliant with “all applicable laws and foreign direct investment regulations” and that it was focusing on making quality and affordable goods available through its “transparent and efficient marketplace”. Amazon did not respond to media queries till the time of going to press.

The action on Amazon comes two days before its global head Jeff Bezos is scheduled to visit India for a short tour. Bezos will be in India in the same week when Amazon is holding its event ‘Smbhav’ to attract more MSME players on its platform.

In their complaint, the Delhi Vyapar Mahasangh said apart from deep discounting and the practice of appointing nominated sellers, both the retailers had exclusive tie-ups and private labels, which leave out MSMEs, forcing them to opt for the higher cost brick-and-mortar model.

“Due to huge market base and market power, the opposing parties (Amazon India and Flipkart) have large repositories of data which allow them to target advertisements based on consumer preferences and marginalise other competitors, which are unable to capture the market due to lack of access to data. This has resulted in creation of high entry barriers on account of network effects,” the MSME body said in its complaint.

The action by the CCI also comes nearly a week after it came out with a report on the key findings and observations of the e-commerce market in India.

In the report, the CCI had flagged that though online commerce had shown increased price transparency and competition, ensuring competition on the merits, increasing transparency to create incentive for competition, and fostering sustainable business relationships between all stakeholders was the immediate need of the hour.f

 

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