Amazon, Flipkart Say Fully Compliant After CCI Orders Probe

The e-commerce giants said they are fully compliant with all applicable laws, after India's competition watchdog on Monday ordered its investigation wing to look into allegations from a traders' body.
Amazon, Flipkart Say Fully Compliant After CCI Orders Probe
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E-commerce giants Flipkart and Amazon on Tuesday said they are fully compliant with all applicable laws, a day after India’s competition watchdog ordered its investigation wing to look into allegations from a traders’ body.

In response to a complaint filed by the Delhi Vyapar Mahasangh, the Competition Commission of India (CCI) said it was of the opinion that “there exists a prima facie case which requires an investigation by the Director General.” The allegations include exclusive launch of mobile phones, preferred sellers on the marketplaces, deep discounting and preferential listing and promotion of private labels.

Praveen Khandelwal, secretary general of the Confederation of All India Traders (CAIT), welcomed the move and said, “It's a historic order of CCI which was long awaited by the traders of the country.”

Related: Everything You Need To Know About Flipkart's and Amazon's Tussle With Traders

In an e-mailed statement, an Amazon India spokesperson said: “we welcome the opportunity to address allegations made about Amazon; we are confident in our compliance, and will cooperate fully with CCI.”

A spokesperson for Flipkart, which was acquired by US retailer Walmart in 2018, said the company was reviewing the document and that it is fully compliant with all applicable laws and foreign direct investment (FDI) regulations.

Flouting of FDI regulations has been one of the major talking points by CAIT against both companies throughout their protests. “We have a very straightforward agenda either Amazon & Flipkart should comply with FDI policy both in letter and spirit or they have to leave India,” Khandelwal said.

CCI Ruling

The CCI took note of each of the allegations and observed that they merited an investigation.

“It needs to be investigated whether the alleged exclusive arrangements, deep-discounting and preferential listing by the OPs (Opposite Parties) are being used as an exclusionary tactic to foreclose competition and are resulting in an appreciable adverse effect on competition,” it stated.

On exclusive tie-ups with mobile phone companies, CCI noted several reports in the media as well as advertisements. “In 2018, Flipkart launched 67 mobile phones and Amazon launched 45 mobile phones exclusively on its platform.”

It also noted the preferred sellers that both companies have, coupled with exclusive launches and discounting practices, “create an ecosystem that may lead to an appreciable adverse effect on competition.”

The CCI said it observed that certain smartphone brands and models were available at significantly discounted prices and were being sold through the platforms’ ‘preferred sellers’ according to the complainant. “Whether funding of discounts is an element of the exclusive tie-ups is a matter that merits investigation,” it said.

Story So Far

The CAIT has been protesting against the e-commerce players for months, having moved their complaints to both the finance minister Nirmala Sitharaman and the minister of commerce and industry Piyush Goyal.

In December, the body extended its complaint to include banks and brands as well, asking for thorough investigation against what it called an “unholy cartel”

Related: Not Just E-Commerce Giants, CAIT Now Blames Brands, Banks of Unfair Practices

Khandelwal in his latest statement said CAIT will soon meet Sitharaman and urged her to institute an investigation into avoidance of GST and Income Tax liability on both companies.

Amazon and Flipkart have both denied all allegations.

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