India’s Competition Commission has opened an antitrust probe into Amazon.com Inc and Walmart Inc’s Flipkart Online Services Pvt, over exclusive arrangements between the retailers and mobile phone brands and preferential treatment given to some sellers.
A complaint by a New Delhi-based traders’ body cited “instances of several vertical agreements between Flipkart with their preferred sellers on the platform” and Amazon with their preferred sellers, “which have led to a foreclosure of other non-preferred traders or sellers from these online marketplaces,” according to a filling from the Competition Commission of India Monday. The complaint also alleges that some smartphone brands are being offered at significantly discounted prices on the retailers’ websites, which puts others at a disadvantage.
The probe comes as Amazon Chief Executive Officer Jeff Bezos is scheduled to make a brief visit to India this week where he will face public rallies organized by trader groups in 300 cities across the country. Amazon and Walmart are competing fiercely in India, and a backlash has been building for months. India’s shopkeepers, who plan a National Protest Day on Jan. 15, allege the companies are engaged in predatory pricing in violation of rules meant to protect local businesses and which were further tightened by the government a year ago. At stake is the future of retailing in a country with 1.4 billion consumers, where Walmart and Amazon have sunk billions of dollars trying the crack the market and capture its growth potential.
Amazon and Walmart didn’t immediately reply to requests for comment outside regular business hours. Both have previously denied such allegations and have said they are fully compliant with the law.
Some half-a-million sellers representing thousands of groups under the Confederation of All India Traders are planning protests this week to demand that Amazon and other online retailers comply with new guidelines that forbid heavy discounting and exclusive online-only deals.
CAIT represents over 70 million small merchants who control more than nine-tenths of the retail trade in a country where big box retailers and chains have yet to penetrate beyond the biggest cities.
The complaint to the competition authority was filed by Delhi Vyapar Mahasangh, which represents a group of small and medium-sized businesses that rely on the sale of smartphones on the onlinlne marketplaces. The complaint said that due to Amazon and Flipkart’s dominant position in the market and “deep pockets,” they are “able to facilitate their sellers’ predatory pricing on their respective platforms.”
The antitrust body is due to complete its investigation and submit its findings within 60 days of the Jan 13 order.