Infant food and fledgling e-commerce laws

Anushka Mittal | Updated on January 23, 2018 Published on August 27, 2015

Try selling this The online challenge Fisher Photostudio/shutterstock.com

It is not clear how promotional curbs on milk substitutes and alcohol will apply to the online space. More clarity is required

What is the one thing common between infant food and alcoholic beverages? No, FSSAI has not run tests to conclude any contamination or common elements, but e-commerce regulators soon might. The promotion and advertisements of both the products are regulated by laws which might not be sufficient in the virtual space.

Infant milk issues

Food for babies in the 0-2 age group is discouraged by domestic legislation and international conventions.

In India, food products and feeding bottles are governed by the Infant Milk Substitutes, Feeding Bottles and Infant Food (Regulation of Production, Supply and Distribution) Act, 1992 (IMS Act for short). Time and again, several companies have flouted norms regulating advertisements and promotion. Promotion is strictly prohibited under Section 3 and 4 of the IMS Act. “Promotion” means to employ directly or indirectly any method of encouraging any person to purchase or use infant milk substitute, feeding bottle or infant food. Advocacy groups have challenged companies selling their products through e-commerce platforms as it amounts to advertisement and promotion. Discount and display are part of the broad idea of promotion.

It is interesting to note that one cannot avail a discount on these products at any local food store or shop. But hyper local e-commerce players like Grofers seem to provide a flat 20 per cent discount on the entire billed amount, which also includes infant food and infant milk substitutes.

By their very nature, e-commerce companies display the product on their website. On the other hand the law prohibits any display of these items at the retail stores. The argument put forth by certain e-commerce companies is that even brick and mortar stores stock up and display products at the point of sale, which amounts to promotion. So, they must also be rounded up.

The Competition Commission of India suggested that these two markets (offline and online) are different channels of distribution of the same product and are not two different markets ( Ashish Ahuja v. Snapdeal.com). Even Arun Gupta, Regional Coordinator, International Baby Food Action Network, Asia, agrees that there is no difference between brick and mortar stores and e-commerce websites. If that is so then e-commerce platforms must not be challenged, as local stores haven’t been. Gupta believes that e-commerce companies should immediately comply with the law as it stands and stop discounts. But e-commerce companies are helpless due to unclear laws.

Alcohol factor

Now it is possible to digitise your alcohol purchase. The only function which the e-commerce platforms perform with respect to liquor is providing a personal catalogue and hassle-free ordering. Since such websites connect the licensed retailers with the buyers, they do not own any logistical services. All the deliveries are handled by these licensed retailers. The problem with liquor websites is twofold. First, the model is not scalable across India. This is because every State has its own laws related to alcohol. Second, catalogues on the website also amount to display which might require permission from the Excise Commissioner. Delhi is governed by the Delhi Excise Act, 2009 (DE Act) and Delhi Liquor License Rules, 1976. The DE Act (Section 41) contains the attributes for permissible advertisement which are catalogues, price lists and other ads. Special ads displayed at points of sale for consumer information need to be approved by the Excise Commissioner.

On a virtual platform, what is the point of sale? It could be the time when you place an order or make payment, in which case it could be the website which would require permission from the Excise Commissioner to display ads.

What is e-commerce?

E-commerce is basically buying and selling online. Its purpose is to integrate and reduce the intermediaries for the consumers while deriving profit out of the integration.

Information Technology Act, 2000 is the only comprehensive legislation dedicated to the virtual space. However, it does not deal with market-based transactions. The only plausible way is to tweak existing laws or make new laws, broadly interpreting e-commerce so that future developments can be assimilated into it.

The writer is a student at Gujarat National Law University

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Published on August 27, 2015
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