Amazon, Oyo, Swiggy Abusing Competition By Offering Discounts? Govt. Wants To Know..
On Wednesday, the Competition Commission of India (CCI) asked the top platforms across multiple sectors including e-commerce, food, hospitality etc for a ‘clear and transparent’ policy on data being collected on their respective platforms, what is the use of such data and sharing of data with third parties or related entities.
How Did This Happen?
As per the reports, CCI has asked the leading marketplaces for clear policies on discounts.
They also asked the “basis of discount rates funded by platforms for different products/suppliers among other things and the implication of participating or not participating in discount schemes,” the report titled Market Study on E-commerce in India – Key Findings and Observations said.
According to the study initiated by CCI in April last year focuses on competition among online platforms in e-commerce, sellers, service providers such as hotels and restaurants, payment service providers etc.
Why Did This Happen?
There has been a concern about trade practices by online platforms and this study comes amid past and present concerns of associations representing various industries and sectors along with traders’ community such as CAIT, NRAI, FHRAI etc.
that have repeatedly alleged unethical trade practices by platforms such as Flipkart, Amazon, Zomato, Swiggy, OYO etc. in business.
Before this, CAIT has been alleging FDI policy violation by Amazon and Flipkart by indulging in predatory pricing and deep discounting impacting businesses of retailers and traders.
Similarly, NRAI and FHRAI have blamed Swiggy and Zomato for alleged deep discounting practices and similarly against OYO for alleged breach of contracts, non-payments, arbitrary change in commission rates etc.
As per this report, “The deep discounting practice of platforms, according to the majority of small and mid-segment restaurants and hotels, is raising serious viability concern,”.
What Can Be Expected In The Future?
Also the emails for comments from the above platforms on CCI mandate were shared and will be updated as and when received.
The e-commerce companies are to provide a general description of the main search ranking parameters in its terms and conditions, among the other transparency measures urged by CCI to.
It also asked to describe the possibilities, if exists, to influence ranking against direct or indirect remuneration paid by business users and its effect on ranking.
Also, CCI has also directed such platforms to ensure transparency with respect to user reviews and ratings “Reviews for only verified purchases to be published and mechanisms to be devised to prevent fraudulent reviews/ratings,” it said.
The report noted “The three elements, which according to the business users of the platforms, are susceptible to manipulation/exploitation by platforms, are search results, sellers’/service providers’ data and user review/rating mechanisms,”.
It is expected that in absence of a formal determination of a violation of the provisions of the Act, boosting transparency in such areas would help in lower information asymmetry.
Which in turn will lead to a positive influence on competition on the platform and between different platforms.