Info-tech

CCI orders probe into deep-discounting by Amazon, Flipkart

Our Bureau New Delhi | Updated on January 13, 2020 Published on January 13, 2020

Delhi Vyapar Mahasangh alleges there were exclusive arrangements between mobile phone brands and the e-commerce platforms, which provided deep discounts to a select preferred sellers.   -  Getty Images/iStockphoto

Just days before Amazon’s Chief Executive Officer Jeff Bezos is expected to arrive in India, the Competition Commission of India (CCI) has ordered an investigation into alleged anti-trust law violation by the e-commerce major as also by Flipkart.

This move follows a complaint by the Delhi Vyapar Mahasangh, alleging that the e-commerce companies gave preferential treatment to certain sellers. It is alleged that there were exclusive arrangements between mobile phone brands and the e-commerce platforms, which provided deep discounts to a select preferred sellers. The CCI said the investigation must look into whether discount funding is an element of the exclusive tie-ups with the preferred sellers.

According to the CCI, the Director-General Investigation has been asked to give a report in 60 days. The petitioners allege that Flipkart and Amazon are the dominant players in the relevant market and are abusing their position.

According to the petitioner, Flipkart provides deep discounts to select preferred sellers, namely Omnitech Retail. As for Amazon, Cloudtail India and Appario Retail have been named by the petitioners. Cloudtail India, a joint venture between Amazon and Catamaran Ventures, is a wholly-owned subsidiary of a joint venture between Amazon and Ashok Patni.

Welcoming the CCI order, Praveen Khandelwal, Secretary-General, Confederation of All India Traders (CAIT), said this order was long-awaited by traders. “Both Amazon and Flipkart have left no stone unturned in destroying and devastating the e-commerce and retail trade market by indulging in all kinds of malpractices including causing huge Goods and Services Tax and Income-Tax revenue loss to the government. Their business model had resulted in closure of thousands of shops in the country in the last three months.”

Khandelwal said this is just a beginning and CAIT will soon meet Finance Minister Nirmala Sitharaman and urged her to institute an investigation into avoidance of GST and income-tax liability on both Amazon and Flipkart. “The CAIT will keep continuing its nationwide agitation against such e-commerce players,” he said, adding, “We have a very straightforward agenda either Amazon and Flipkart should comply with FDI policy both in letter and spirit or they have to leave India.”

Published on January 13, 2020
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