The Competition Commission of India has directed the Director General to probe the allegations of violation of Competition Act by these e-commerce giants.
The order was passed by the Commission on a prima facie finding that Amazon and Flipkart were giving undue promotion to some sellers over other smaller sellers.
The complaint was filed by a group of small and medium sized retailers named ‘Delhi Vyapar Mahasangh’ which alleged that these companies were giving preferences to certain sellers which were affiliated or indirectly controlled by Amazon and Flipkart.
The complaint alleged contravention of the provisions of Section 3(4) read with Section 3(1) and Section 4(2) read with Section 4(1) of the Competition Act.
The preferential treatments were meted out in the form of deep discounting, preferential listing, etc in relation to certain mobile phone sellers.
In this regard the CCI noted :
“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 significantly discounted prices 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”.
The anti-trust body also observed that “Competition on the platforms may get influenced in favour of the exclusive brands and sellers, through higher discounts and preferential listing”.
“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 alleged by the Informant merits an investigation. 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 contravening the provisions of Section 3 (1) read with Section 3(4) of the Act”, the CCI observed.