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E-Commerce Policy, May Propose To Restrict Deep Discounts

The Union Commerce Minister made an official statement in the Indian Parliament that the government is it is looking to restrict deep discounts being offered by the e-commerce firms in India. The domestic offline retail segment has been up in arms asking the independent regulator Competition Commission of India to intervene and put a stop to this practice. But CCI has expressed its inability to take any action saying it is beyond its purview under the relevant laws.

The issue of regulating the e-commerce business in the country has been going back and forth for a while now. Only recently, the government took a decision to shift the onus to the Department of Industrial Policy and Promotion (DIPP) to work on it. The DIPP has already prepared a draft policy paper, which is under the consideration of various stake holders. The Minister is likely to hold an internal consultation meeting to review the policy paper without any other stake holders present.

The sticking point in the Competition Law, as it stands, relating to the abuse of the dominant position in an industry may also be looked at if it needs any amendment, the Minister said. This Clause No.4 of the Act is what the offline retailers have been quoting in their complaints and it is the same clause that CCI referred in its detailed reply to state that it does not find companies like Amazon and Flipkart flouting. The government will now take a look at this legislation to see if there is any loophole in the Act and if has to be amended.

Almost on similar lines, the Section 6 of the Act dealing with mergers and amalgamations will also be reviewed in light of the serious objections being raised on the recent takeover of Flipkart by Walmart. Some homegrown firms feel these kinds of acquisitions should be controlled. At that time too, the offline retailers had petitioned to CCI to stop giving its approval to the takeover but to no effect.

And then there is the accusation that the e-commerce firms are flouting the FDI norms on B2C selling by re-routing the merchandise through select sellers who make purchases on their B2B platforms.

A via media may be suggested in the fresh policy where the ecommerce firms may be permitted to sell products at discounted rates but a sunset clause may be introduced limiting the duration for which such discounts may be offered.― The News Minute

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