Govt Will Investigate Deep Discounts Given By Amazon, Flipkart On Smartphones: Are Competition Rules Being Abused Here?

On Monday, India’s antitrust body has ordered an investigation into alleged competition law violations by e-commerce giants Amazon.com Inc and Walmart owned Flipkart.

How Did This Happen? 

As per the reports, the Competition Commission of India (CCI) ordered an investigation into alleged violations of competition law by India’s largest online retailers Amazon and Flipkart.

According to CCI, exclusive arrangements between mobile phone brands and e-commerce platforms, as well as allegations of e-commerce companies giving preferential treatment to certain sellers “merits an investigation”.

What Do These Allegations Say?

This investigation seems to be a setback for Amazon and Walmart’s Flipkart, which Indian brick-and-mortar traders allege violate the country’s foreign investment rules.

While both the e-commerce giants deny those allegations.

The allegations talk about the exclusive launch of mobile phones, preferred sellers on the marketplaces, deep discounting and preferential listing/promotion of private labels.

The order for the probe comes against the backdrop of trader communities across the country levelling several allegations of violations of FDI in e-commerce, along with the ones mentioned above against the online giants as per the report. 

Also the Confederation of All India Traders (CAIT), which is spearheading a nationwide stir against the e-commerce giants called the order by CCI “historic”.

The order said “The Commission is of the opinion that there exists a prima facie case which requires an investigation,”.

What Does The Amazon And Flipkart Say About These Allegations?

The SVP & chief corporate affairs officer at Flipkart Group said “We are currently reviewing the document. The Flipkart group is fully compliant with all applicable laws and FDI regulations”.

The investigation order comes amidst when in a week Amazon chief Jeff Bezos is expected to visit India for a company event and potential meetings with government officials.

While 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,”.

What To Expect Next?

Moreover, the CCI has asked the Director General to investigate the alleged predatory practices of Amazon and Flipkart after being approached by the Delhi Vyapar Mahasangh, a group representing small- and medium-sized businesses.

They alleged that several of Amazon and Flipkart’s preferred sellers were affiliated with or controlled by the companies themselves, either directly or indirectly. 

The Director General has 60 days to submit the report in this regard.

The CCI has given 11-page order in which they want its investigations arm to probe the e-commerce companies’ discounting practices as well as their relationship with such sellers.

The investigation is the latest setback for Amazon and Walmart’s Flipkart, which Indian brick-and-mortar traders allege violate the country’s foreign investment rules and burn billions of dollars to offer steep discounts that hurt smaller traders.