Flipkart and Amazon are under the crosshair again for their exclusive arrangements, deep discounting and preferential listing practices. The Competition Commission of India (CCI) launched an investigation to find out if the e-commerce marketplaces are having an adverse effect on competition. The investigation was passed by Ashok Kumar Gupta, chairman, and members Sangeeta Verma and Bhagwant Singh Bishnoi.
Moreover, an informant claimed that Amazon and Flipkart had 36 and 53 percent market share, respectively, in Q1 2019. The Commission noted that there are four alleged practices on the marketplaces. These are: exclusive launch of mobile phones, preferred sellers on the marketplaces, deep discounting and preferential listing/promotion of private labels.
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The Commission has also noted several reports in the media as well as advertisements by e-commerce portals regarding exclusive launches. Mobile manufacturing companies like OnePlus, OPPO, and Samsung have exclusively launched several of their models on Amazon. Similarly, brands like Vivo, Realme, Xiaomi have exclusively launched several of their models on Flipkart. In 2018, Flipkart launched 67 mobile phones and Amazon launched 45 mobile phones exclusively on its platform.
Flipkart and Amazon’s agreements with select sellers
The trader’s body also stated that the that there are various instances of vertical agreements between Flipkart and Amazon with their preferred sellers on the platform. This has over time led to the foreclosure of other non-preferred traders or sellers. It has been alleged that most of these preferred sellers are affiliated with or controlled by Flipkart or Amazon, either directly or indirectly.
These agreements include proving the deep discounts to select sellers. The complaint says that Flipkart provides deep discounts to a select few preferred sellers (such as Omnitech Retail) on its platform. A similar allegation is on Amazon. The allegation states that Amazon has preferred sellers like Cloudtail India (a joint venture between Amazon and Catamaran Ventures) and Appario Retail which are related to Amazon.
Further, the complaint said that both the e-commerce players have tie-ups and private labels which are given preference. Flipkart is accused of using tie-up strategies across all markets including smartphones. It is alleged that by having exclusive tie-ups in the relevant market with the smartphone companies, it provides exclusivity through discounting and preferential listings.
This leads to other competitors being excluded and foreclosed from the market. It is stated that any benefit to the consumers is only apparent at the initial stage. This refers to until critical mass of network effects is reached or competitors are eliminated. The Commission has demanded the completion of the investigation within a period of 60 days.
(With inputs from IANS)