India’s fair trade regulator CCI on Monday ordered a probe against Flipkart and Amazon for alleged malpractices, including deep discounting and tie-ups with preferred sellers, reports Press Trust of India.
The order follows a complaint filed by Delhi Vyapar Mahasangh, whose members comprise many traders.
‘The Commission observes 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 (opposite parties) alleged by the Informant merits an investigation,’ the Competition Commission of India (CCI) said in an order. 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, it added.
The commission said that it expected the investigation to be completed in the next 60 days, adds CNN Business.
A spokesperson for Flipkart, which Walmart (WMT) acquired 77 per cent of in 2018 for $16 billion, said the company was ‘fully compliant’ with Indian laws and regulations. ‘We are currently reviewing the document,’ the spokesperson added.
Amazon also denied wrongdoing and said it would cooperate with the investigation, according to the CNN Business report. ‘We welcome the opportunity to address allegations made about Amazon; we are confident in our compliance, and will cooperate fully with CCI,’ a company spokesperson said.
India is a huge market for Amazon and Flipkart, with nearly 700 million internet users and an e-commerce market that Morgan Stanley projects will be worth around $200 billion by 2027.
The antitrust investigation comes days after Walmart laid off 56 employees in India, including eight senior managers. Walmart said in a statement to CNN Business that the layoffs were part of a review to improve efficiency, adding that it continues to invest in India. Amazon CEO Jeff Bezos is also expected to visit India later this week, with a meeting with Indian prime minister Narendra Modi potentially on the cards.
The Confederation of All India Traders (CAIT), another large trade group that represents millions of small brick-and-mortar stores across the country and has vocally opposed Amazon and Walmart, said it welcomed the investigation.
‘Both Amazon and Flipkart have left no stone unturned in destroying and devastating the e-commerce and retail trade market by indulging in all kinds of malpractices,’ CAIT secretary general Praveen Khandelwal said in a statement. ‘Their autocratic business model has resulted in the closure of thousands of shops,’ he added.
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