A Big Blow To Amazon and Flipkart: CCI Investigation To Continue

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Flipkart and Amazon continue to find themselves in hot water as their plea against the investigation that is being carried out by CCI is rejected by the High Court of Karnataka. Both the eCommerce giants are being investigated for exercising anti-competitive practices.

Flipkart and Amazon has been facing the wrath of offline retailers who claim to have tough market conditions due to the deep discounts and other offers being offered by eCommerce giants at regular intervals.

The division bench of the Karnataka High Court has said that it does not think that, in any case, the investigation should be crushed at this stage. The bench further added that the appellants shouldn’t fear of being investigated if they haven’t violated the Competition Act. The court also felt that the appeals were devoid of any merit, and it was why the requests by the tech giants were dismissed.

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Investigation Against Flipkart And Amazon: The Big Picture

  • Back in October 2019, the Delhi Vyapar Mahasangh (DVM) accused Flipkart and Amazon, of predatory pricing, preferential treatment of sellers, anti-competitive practices, etc. The DVM, a group representing small and medium business owners in Delhi, filed a plea against the two conglomerates under section 3 and 4 of the Competition Act.
  • In January 2020, the Competition Commission of India (CCI), based on this plea, started a probe against Amazon and Walmart-owned Flipkart under Section 3 of the Competition Act.
  • The two digital e-commerce giants denied any wrongdoings and stalled the probe for over a year. However, two weeks ago, a court dismissed their arguments that the Indian regulator lacked any evidence and asked the latter to expedite the probe.
  • Both Flipkart and Amazon had appealed in the Karnataka High Court to restrain CCI’s investigation against their flawed practices, both of which were rejected by the high court.
  • The two companies filed an appeal against the high court’s order which has now been rejected by the division bench of the same court.
  • The probe against Flipkart and Amazon is not the only one being carried out by India’s regulator, CCI. Last year the CCI reviewed the allegations against Google, which accused it of exploiting its dominant position in the market. According to some, the former is likely to order an antitrust investigation against the latter soon.
  • According to an expert, the CCI is explicitly looking into cases involving digital firms. They will have a massive impact on the Indian economy in general and Indian startups in particular.
  • The watchdog is also looking into the changed privacy practices of Facebook-owned WhatsApp and the practices at MakeMyTrip. The CCI is also at loggerheads with Amazon over its deal with the Future Group, catching headlines.
  • The retail eCommerce sales in India is estimated to clock the highest growth rate in 2021, beating China and the US. With 27% YOY growth, the market is estimated to be as big as $66 billion.
  • Despite such promising growth number, retail eCommerce will only be able to account for just 7% of India’s retail sales in 2021.
  • By 2025, India’s retail eCommerce sales share is expected to swell to 10.3%, making the offline retail $1.3 trillion market.

Food For Thought

The judges are right at pointing out that if the tech giants have done no wrong, they have nothing to fear. Amazon, which has made its presence felt in the international arena, is known for anti-competitive bullying. Therefore, the DVM’s complaint and the CCI’s investigation hold ground.

In an era when slogans like ‘vocal for local’ and ‘support small businesses are going viral, if Amazon and Flipkart are found guilty, they can face the wrath of the watchdog as well as the population. However, considering that giants like Amazon and Flipkart, along with other e-commerce players, are only able to scratch the surface of India retail market, retailers must employ alternate strategies to win their customers’ loyalty.

All said and done, authorities must make sure that there must be a level playing field for every retailer – be it online or offline.

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