Alleging unfair practices, vendors move CCI against Flipkart

Sangeetha Chengappa Bengaluru | Updated on May 23, 2018

The online vendors’ body has sought a regulator   -  ABHISHEK N.CHINNAPPA

Raise issues about Walmart deal, too

The All India Online Vendors Association (AIOVA), representing more than 3,500 sellers on e-commerce marketplaces, has filed a petition with the Competition Commission of India (CCI) claiming that Flipkart Internet Pvt Ltd has abused its dominant position imposing unfair terms on buyers as well as sellers. It has sought a probe into such practices.

Making an indirect reference to the Walmart-Flipkart deal, AIOVA also sought a regulatory body for the e-commerce sector which should be formed before any changes are made in the ownership and control of any marketplace.

This comes just as the Confederation of All India Traders (CAIT), which represents 6.5 crore traders/sellers represented by 40,000 trade associations across the country, is to submit its petition to the CCI on Thursday, slamming the Walmart-Flipkart deal.

These developments come three days after Walmart approached the CCI to seek approval for its proposed acquisition of Flipkart, submitting that the proposed transaction does not give rise to competition concerns because Walmart India Pvt Ltd is engaged in wholesale B2B business, while Flipkart is in the business of providing marketplace-based-e-commerce platform for B2C trade.

Charge against Flipkart

In its petition, Counsel for AIOVA Chanakya Basa said, “We believe that Flipkart Pvt Ltd has abused its dominant position under Section 4(a) of the Competition Act 2002, by imposing unfair or discriminatory condition in purchase or sale of goods. Flipkart India Pvt Ltd, a subsidiary of the Flipkart Pvt Ltd Singapore, is a wholesale dealer which acquires goods from various persons and immediately sells them to retail sellers like WS Retail Services Pvt.Ltd at huge discounts. These outfits subsequently sell those goods at unmatched prices as sellers on internet platform under the name ‘Flipkart.Com’.”

“Walmart has filed Form 1 with the CCI for approval, which should be approved. Form 1 is filed if businesses of Walmart and Flipkart overlap. In this case, only the B2B wholesale business amounts to less than 15 per cent of the wholesale business market share in the country. There are no other overlaps or competing businesses besides this. The CCI will take up to 60 days because of weekends, holidays and queries raised by the CCI and the time taken by Walmart and Flipkart to respond to them,” a competition lawyer at a top law firm told BusinessLine.

Rivals’ apprehensions

A spokesperson from AIOVA told BusinessLine that Walmart will now be able to sell its products on Flipkart and will receive preferential seller treatment much like its subsidiary, WS Retail, Retail Net and others who receive supplies from Flipkart’s wholesale arm. This will kill AIOVA sellers which are already struggling. “We have even protested against Amazon pushing its own brand inventory/private label inventory pileup through Cloudtail, a subsidiary of Amazon India, which sells on its marketplace,” he said.

Praveen Khandelwal, Secretary-General, CAIT, said, “Our team of lawyers is preparing a petition to be presented to CCI day after on issues around flouting FDI policy, data security issues as data control will be in the hands of Walmart, and its ability to lend working capital loans at 1.5-2.5 per cent interest rates to sellers as against over 12 per cent charged in India, which itself is enough to kill our sellers.”

He said CAIT will follow the petition through to its logical end and going right up to the Supreme Court, if necessary.

Published on May 23, 2018

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