India’s competition watchdog ordered an investigation into Amazon and Flipkart on Monday, a day before Amazon chief executive Jeff Bezos was due to arrive in the country.
The Competition Commission of India (CCI) acted on a complaint from the Delhi Vyapar Mahasangh, an umbrella body of offline retailers in the capital. The target is the way the two online sellers handle mobile phones: deep discounts the complaint calls predatory, and exclusive launches.
Four alleged practices
The CCI listed four anti-competitive practices raised in the complaint. They are exclusive phone launches, preferred sellers on the platforms, deep discounting, and preferential listing and promotion of the platforms’ own private labels.
The regulator also gave numbers. Flipkart launched 67 mobile phones exclusively on its site in 2018, and Amazon launched 45 for Indian customers. On first look, the CCI said, that suggests a partnership between phone makers and e-commerce platforms that “may lead to an appreciable adverse effect on competition”. It also wants to know whether the platforms’ funding of discounts is part of those exclusive tie-ups.
The commission told its Director-General to find out whether the conduct of Flipkart and Amazon broke India’s competition rules. A report is due within 60 days.
What the companies say
Both firms rejected the suggestion of wrongdoing. Flipkart said it was studying the order. “The Flipkart Group is fully compliant with all applicable laws and FDI regulations,” said Rajneesh Kumar, its senior vice president and chief corporate affairs officer. He said the company takes pride in “democratising e-commerce in India” and in giving market access to lakhs of small businesses, sellers and artisans.
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.”
The probe did not come out of nowhere. On Saturday, CCI Chairman Ashok Kumar Gupta told CNBC-TV18 that a study by the regulator of Indian online platforms had turned up problems with deep discounting, search ranking and the use of consumer data. Other businesses that feel they still need enforcement, he said, can file cases, and the CCI can also take up such cases on its own initiative.
