The Competition Commission of India has ordered an investigation on allegations levelled against Flipkart and Amazon over sharp market practises including exclusive launch of mobile phones, preferred sellers on the marketplaces, deep discounting and preferential listing/promotion of private labels.
The complaint was filed by the Delhi Vyapar Mahasangh, a group representing brick and mortar small businesses.
The Informant alleged that there is evidence in the form of communications from Flipkart to its sellers stating that it would incur a part of the cost during the Big Billion Days (BBD) sales or Diwali sales etc. However, no such opportunity is available to other sellers who are, thus, unable to compete with such preferred sellers.
Amazon has preferred sellers on its platform namely Cloudtail India (a joint venture between Amazon and Catamaran Ventures) and Appario Retail (a wholly owned subsidiary of a joint venture between Amazon and Mr. Ashok Patni which received a round of investment from Frontizo Business Services Ltd.) which are related to Amazon. Similar allegations of deep discounts by Amazon to the detriment of non-preferred sellers have been levelled.
“We welcome the opportunity to address allegations made about Amazon; we are confident in our compliance, and will cooperate fully with CCI”, an Amazon spokesperson said.
Flipkart said it was reviewing the order and that the company was fully compliant with all applicable laws.
The Commission observed that the exclusive arrangements between smartphone/mobile phone brands and e-commerce platform/select sellers selling exclusively on either of the platforms, as demonstrated in the information, coupled with the allegation of linkages between these preferred sellers and OPs alleged by the Informant merits an investigation.
Commission said there exists a prima facie case which requires an investigation by the Director General (‘DG’), to determine whether the conduct of Flipkart and Amazon have resulted in contravention of the provisions of Section 3(1) of the Act read with Section 3(4). Accordingly, the Commission directs the DG to cause an investigation to be made into the matter under the provisions of Section 26(1) of the Act.