The Karnataka High Court on June 11 is expected to deliver its verdict if the Competition Commission of India (CCI) can go ahead with a probe against Amazon and Flipkart for alleged anti-competitive practices, a judgment that will have a bearing on India’s expanding e-commerce space.
It all started almost 18 months ago when the Delhi Vyapar Mahasangh (DVM), a group representing small and medium business owners in the national capital, submitted a plea with CCI against the country’s two biggest e-commerce players, accusing them of anti-competitive practices, predatory pricing and preferential treatment of sellers among others.
So, what is at stake? Who is saying what and what does it mean for the country’s antitrust watchdog and e-commerce in India.
— In October 2019, DVM alleged that Amazon and Flipkart were giving preferential treatment to a select set of vendors by having indirect control on their operations, especially the launch of smartphones
— DVM’s sought to highlight how small vendors were finding it difficult to compete with the online giants, given their deep pockets and steep discounts they were offering to consumers.
— It also raised the issue of exclusive smartphone launches on these platforms in violation of the Indian rules for marketplaces. Marketplaces, read ecommerce players, cannot mandate sellers to sell any product exclusively on their platforms. A marketplace cannot exercise ownership and control over the inventory purported to be sold on its platform, the rules say. DVM filed the complaints under Sections 3 and 4 of the Competition Act.
— While the CCI rejected the abuse of dominance allegation, it passed an order in January 2020 based on the information submitted by DVM under Section 3, directing the director-general to conduct a probe.
— This order was challenged by Amazon through a writ petition in the Karnataka High Court in February 2020. The high court put the CCI’s investigation on hold the same month.
— In September 2020, CCI challenged the interim order in the Supreme Court. Justice Nageswara Rao sent the case back to the High Court, saying the case be heard as soon as possible in October 2020.
— The case has since been going on in the High Court.
— All parties, including Amazon, Flipkart, CCI and DVM, have presented their side before Justice PS Dinesh Kumar of the High Court.
— Criticising the discounts offered on marketplaces like Amazon and Flipkart, in one of its arguments, CCI said when a big player enters a space, it offers discounts to capture the market. People should be alert once the prices go abnormally low. While the company takes the hit for some time, the larger agenda always is to weed out smaller players.
— The antitrust watchdog also stressed the fact that the regulator was well within its rights to probe Amazon and Flipkart for anti-competitive practices.
— Amazon, on its part, has described as completely incorrect the allegations of the company having preferred sellers. There was no direct relation between Amazon and any of its sellers, the American e-commerce giant has said.
— Flipkart has also denied allegations of indulging in anti-competitive practices.
It is now up to the Karnataka High Court to decide if CCI will be able to continue its investigation against the two biggest e-commerce players in India