E-comm has increased price transparency and price competition: CCI study

Our Bureau New Delhi | Updated on January 08, 2020 Published on January 08, 2020

The search and compare functionalities of online platforms have lowered search cost for consumers

E-commerce has increased price transparency and price competition in the country, a new report released by Competition Commission of India (CCI) has said.

This report titled ‘Market Study on E-commerce in India: Key Findings and Observations’ highlighted that e-commerce is gaining importance across the sectors in India.

The search and compare functionalities of online platforms have lowered search cost for consumers and have provided them with a wide array of alternatives to choose from, the study revealed.

For businesses, e-commerce has helped expand market participation by aiding innovative business models, the study said.

The share of online distribution and its relative importance vis-à-vis traditional channels varies significantly across products. This divergence constrains construction of a unified competition narrative and points to the need for product-specific assessment of market and competition dynamics.

The CCI had in April 2019 initiated this study with an objective to better understand the functioning of e-commerce in India and its implications for markets and competition.

The objective was also to identify impediments to competition, if any, emerging from e-commerce and to ascertain the Commission’s enforcement and advocacy priorities in light of the same.

Discount policy

The CCI report has also urged the e-commerce platforms to among other things bring out clear and transparent policies on discounts, including the basis of discount rates funded by platforms for different products/suppliers and the implications of participation/non-participation in discount schemes.

E-commerce platforms have been asked to set out a clear and transparency policy on data that is collected on the platform, the use of such data by the platform and also the potential and actual sharing of such data with third parties or related parties.

The study covered three broad categories of e-commerce in consumer goods (mobiles, lifestyle, electrical and electronic appliances and grocery), accommodation services and food services.

Sixteen online platforms, 164 business entities [including sellers (manufacturers and retailers) and service providers (hotels and restaurants)] and 7 payment system providers from across India participated in the study. In addition, 11 industry associations, representing different stakeholder groups, also participated.

The report enumerates certain areas for self-regulation by the e-commerce marketplace platforms, an official release said. These have been advocated with a view to reducing reduce information asymmetry and promote competition on the merits. The CCI under its advocacy mandate has urged the e-commerce platforms to put in place the following transparency measures.

Set out in the platforms’ terms and conditions a general description of the main search ranking parameters, drafted in plain language and keep that description up to date.

Where the main parameters include the possibility to influence ranking against any direct or indirect remuneration paid by business users, set out a description of those possibilities and of the effects of such remuneration on ranking.

Introduction of these features should not entail, disclosure of algorithms or any such information that may enable or facilitate manipulation of search results by third parties

The insights gained from the study will inform antitrust enforcement in these markets. Nonetheless, bargaining power imbalance and information asymmetry between e-commerce marketplace platforms and their business users are at the core of many issues that have come up in the market study. Thus, without a formal determination of violation of competition law, improving transparency over certain areas of the platforms’ functioning can reduce information asymmetry and can have a positive influence on competition outcomes, the report said.

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Published on January 08, 2020
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