The Competition Commission of India (CCI) on Monday ordered an investigation into alleged violations of competition law by India’s largest online retailers Amazon and Flipkart.
The allegations include the exclusive launch of mobile phones, preferred sellers on the marketplaces, deep discounting and preferential listing/promotion of private labels.
The order for the probe comes against the backdrop of trader communities across the country leveling several allegations of violations of FDI in e-commerce, along with the ones mentioned above against the online giants. The Confederation of All India Traders (CAIT), which is spearheading a nationwide stir against the e-commerce giants called the order by CCI “historic”.
“The Commission is of the opinion that there exists a prima facie case which requires an investigation,” said the order.
The complaint against the companies was filed by Delhi Vyapar Mahasangh, a group representing small- and medium-sized businesses. Among other things, the complaint alleged that several of the e-tailers’ preferred sellers, such as Cloudtail and Appario Retail on Amazon India and Omnitech on Flipkart were affiliated with or controlled by the companies themselves, either directly or indirectly. “We are currently reviewing the document.
The Flipkart group is fully compliant with all applicable laws and FDI regulations” said Rajneesh Kumar SVP & chief corporate affairs officer at Flipkart Group said.
CCI’s decision comes ahead of Amazon founder Jeff Bezos visit to India later this week, during which he is expected to meet senior government officials.
“We welcome the opportunity to address allegations made about Amazon; we are confident in our compliance, and will cooperate fully with CCI,” an Amazon India spokesperson said.
“The Commission perused the prices for different smartphone brands sold through Flipkart and Amazon, i.e. original price and discounted price. It was observed that certain smartphone brands/models are available at a significantly discounted price on these platforms and are sold largely through the sellers identified, by the Informant, as the platforms’ ‘preferred sellers’.
Whether funding of discounts is an element of the exclusive tie-ups is a matter that merits investigation,” said its order.
The Karnataka high court on Friday stayed the Competition Commission of India’s (CCI)’s investigation into Amazon India and Walmart-owned Flipkart for alleged anti-competitive practices, including predatory pricing and preferential treatment of sellers.
The high court granted eight weeks to the e-commerce companies to file their responses and is expected to resume hearing thereafter.
The stay came in response to a 10 February writ petition by Amazon against CCI’s January decision to launch a probe following complaints that the e-commerce platforms had misused their dominant positions.