E-commerce Companies Not Violating Competition Norms, Says CCI

Competition Commission of India has concluded that the business practices of Flipkart and Amazon were not in violation of competition norms, and rejected allegations of abuse of market dominance made by a grouping of online vendors.

Amid concerns expressed in various quarters about alleged unfair business practices in the fast-growing online marketplace, the CCI also made it clear that any intervention in the evolving e-commerce market place needs to be “carefully crafted” to ensure that innovations are not stifled.

The latest ruling from the fair trade regulator is a result of a complaint filed by the All India Online Vendors Association, a grouping of over 2000 sellers on various e-commerce market places.

The allegations were made against Flipkart India Pvt Ltd., which is into wholesale trading and distribution of books, mobiles, computers and related accessories, and Flipkart Internet Pvt Ltd. The latter is engaged in e-commerce marketplace business under the brand name Flipkart.com, as per details available with the CCI.

To assess the merits of the complaint, CCI considered ‘services provided by online marketplace platforms for selling goods in India’ as the relevant market. In its order, dated, the watchdog said that while looking at the present market construct and structure of online marketplace platforms in India, “it does not appear that any one player in the market is commanding any dominant position at this stage of evolution of market.”

While concluding that there is no violation of Section 4 of the Competition Act, that pertains to abuse of dominant market position, the CCI said that the Flipkart marketplace is required to comply with conditions applicable to entities involved in the business of e-commerce, as set out in the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017.

“As such, Flipkart Internet is bound by these laws, the compliance of which is ensured by the relevant authorities,” the order said. Though the complaint was filed against Flipkart entities, the regulator said it deemed it appropriate to hold preliminary conference with Amazon Seller Services Pvt Ltd., as that, too, is a key player in the relevant market.

Citing the market construct and the context of examining allegations against Flipkart, the regulatory body noted that there was no case of contravention of Section 4 by Amazon as well.

Further, the regulator observed that the market place based e-commerce model is still a relatively nascent and evolving model of retail distribution in India. — BloombergQuint

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