India’s Antitrust Regulator Orders Probe Against Amazon & Flipkart
Both the online shopping players hold major market share in the country, which has become a matter of concern.
The week has started on a sour note for two of the biggest online shopping brands in the country. The companies are now reportedly going to be investigated after the antitrust regulatory body Competition Commission of India (CCI) enquired about their competition policy violations, which seem to have helped them gain a foothold in the market. This news comes a few days ahead Amazon founder Jeff Bezo’s visit to India.
The report from Reuters on Monday suggests that Amazon’s and Flipkart’s (now owned by Walmart) exclusive arrangement with certain brands is also under the scanner, as the order from CCI says it "merits an investigation."
The allegations put forth by the CCI raise some serious questions about how both these e-commerce brands function in the market. Through the order, it has pointed out “these platforms are allegedly capable of influencing prices being charged by sellers, by providing several discounts as well as inventory to the sellers.”
The antitrust body has picked up elements like deep discounting, exclusive brand tie-ups, preferential listing and market duopoly as the reasons for considering a thorough investigation of business practices of both the online sellers.
Using the online platform, CCI also alleges the players can “gather data on consumer preferences and allegedly use them to their advantage.”
By using terms like "Assured seller" and "Fulfilled" for sellers, Flipkart and Amazon respectively list their products on the first page, which is where usually people buy most of their products from. This means the non-preferred partners get left out.
Also, the order says the exclusive tie-ups with brands, especially smartphone brands on which these players tend to offer discounts, are preferential listings.
More importantly, CCI tries to connect the dots between these so-called preferred sellers and their possible links to either of these online selling platforms.
The Reuters report says both the companies have denied these allegations.
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