US e-commerce giants Amazon and Walmart's Flipkart have violated local competition laws by giving preferential treatment to select sellers on their shopping websites, an Indian anti-competition report has revealed. Investigation,
Ecommerce platform is violating Indian competition law
The Competition Commission of India (CCI) appears to have ordered an investigation into Amazon and Flipkart during 2020.
These e-commerce platforms were allegedly promoting certain sellers with whom they had business agreements and giving priority to certain listings.
Further, the CCI investigators in their 1,027-page report on Amazon and a separate 1,696-page report on Flipkart said the two companies have created an ecosystem where preferred sellers appear higher in search results, outpacing other sellers. Both these reports were released on August 9.
Both reports confirmed that “each of the alleged anti-competitive practices was investigated and found to be true.”
Both reports reached similar conclusions on both companies, stating that “common vendors have become mere database entries.”
Till now Amazon and Flipkart and CCI have not issued any comment in this regard.
Earlier, he had denied any wrongdoing and said his conduct was in accordance with Indian laws.
Both companies will now have to review the report and lodge their objections before the CCI staff decides on any possible penalty.
The findings of this investigation are the latest setback for Amazon and Flipkart in the country.
These platforms are facing criticism from small retailers for their business practices.
According to him, his business has suffered in recent years due to the deep discounts offered online.
It all started when a complaint was filed by Delhi Vyapar Mahasangh, a group of retailers.
As far as India is concerned, Amazon and Flipkart are the leading companies in the Indian e-retail market.
Consultancy firm Bain estimates that the Indian e-retail market will be worth $57-60 billion in 2023, and reach $160 billion by 2028.
This is not the first time the Federal Trade Commission, United States has sued Amazon, alleging that the company “illegally uses anti-competitive and unfair strategies to maintain its monopoly power”.
In its defense, Amazon said the FTC's lawsuit was a step in the wrong direction and would harm consumers by raising prices and slowing down deliveries.
Amazon, Flipkart offering preferential listings and huge discounts
During this investigation, Indian investigators raided some sellers on Amazon and Flipkart following a Reuters investigation in 2021.
Essentially, the investigation was based on Amazon’s internal documents and revealed that the company had given preferential treatment to a small group of sellers on its platform for years, and used them to circumvent Indian laws.
The report further emphasises that the practice of including mobile phones in the preferential list and offering deep discounts – including selling products below cost price – “has a devastating effect on the existing competition in the market.”
CCL's report on Flipkart said various services such as marketing and delivery were offered to preferred sellers at a “nominal cost”.
These sellers were also allowed by Flipkart to sell phones at deep discounts, which amounted to “predatory pricing” and eliminated competition, CCI said.
Both reports confirmed that “anti-competitive practices are not limited to the sale of mobile phones. They are equally prevalent in other categories of goods.”
