Flip­kart, Ama­zon not vi­o­lat­ing com­pe­ti­tion norms, says CCI

Financial Chronicle - - PLAN, POLICY - PRESS TRUST OF IN­DIA

Fair trade watch­dog CCI has con­cluded that the busi­ness prac­tices of Flip­kart and Ama­zon are not in vi­o­la­tion of com­pe­ti­tion norms and re­jected al­le­ga­tions of abuse of mar­ket dom­i­nance made by a group­ing of on­line ven­dors.

Amid con­cerns ex­pressed in var­i­ous quar­ters about al­leged un­fair busi­ness ways in the fast-grow­ing on­line mar­ket place, the CCI in its rul­ing also made it clear that any in­ter­ven­tion in the evolv­ing e-com­merce mar­ket place needs to be "care­fully crafted" to en­sure that in­no­va­tions are not sti­fled. The lat­est rul­ing from the Com­pe­ti­tion Com­mis­sion of In­dia (CCI) has come on a com­plaint filed by the All In­dia On­line Ven­dors As­so­ci­a­tion, a group­ing of over 2,000 sell­ers on var­i­ous e-com­merce mar­ket places. The al­le­ga­tions were made against Flip­kart In­dia Pvt Ltd, which is into whole­sale trad­ing/dis­tri­bu­tion of books, mo­biles, com­put­ers and re­lated ac­ces­sories, and Flip­kart In­ter­net Pvt Ltd. The lat­ter is en­gaged in ecom­merce mar­ket­place busi­ness un­der the brand name Flip­kart.com, as per de­tails avail­able with the CCI.

To as­sess the mer­its of the com­plaint, CCI con­sid­ered 'ser­vices pro­vided by on­line mar­ket­place plat­forms for sell­ing goods in In­dia' as the rel­e­vant mar­ket.

In its or­der, dated Novem­ber 6, the watch­dog said that look­ing at the present mar­ket con­struct and struc­ture of on­line mar­ket­place plat­forms in In­dia, “it does not ap­pear that any one player in the mar­ket is com­mand­ing any dom­i­nant po­si­tion at this stage of evo­lu­tion of mar­ket.”

While con­clud­ing that there is no vi­o­la­tion of Sec­tion 4 of the Com­pe­ti­tion Act, that per­tains to abuse of dom­i­nant mar­ket po­si­tion, the CCI said that the Flip­kart mar­ket­place is re­quired to com­ply with con­di­tions ap­pli­ca­ble to en­ti­ties in­volved in the busi­ness of e-com­merce, as set out in the For­eign Ex­change Man­age­ment Reg­u­la­tions, 2017.

“As such, Flip­kart In­ter­net is bound by these laws, the com­pli­ance of which is en­sured by the rel­e­vant au­thor­i­ties,” the or­der said.

Though the com­plaint was filed against Flip­kart en­ti­ties, the reg­u­la­tor said it deemed it ap­pro­pri­ate to hold pre­lim­i­nary con­fer­ence with Ama­zon Seller Ser­vices Pvt Ltd, as that is also a key player in the rel­e­vant mar­ket.

Cit­ing the mar­ket con­struct and the con­text of ex­am­in­ing al­le­ga­tions against Flip­kart, the CCI noted that there is also no case of con­tra­ven­tion of Sec­tion 4 by Ama­zon as well.

Fur­ther, the reg­u­la­tor ob­served that the mar­ket place based e-com­merce model is still a rel­a­tively nascent and evolv­ing model of re­tail dis­tri­bu­tion in In­dia.

“Recog­nis­ing the growth po­ten­tial as well as the ef­fi­cien­cies and con­sumer ben­e­fits that such mar­kets can pro­vide, the Com­mis­sion is of the con­sid­ered opin­ion that any in­ter­ven­tion in such mar­kets needs to be care­fully crafted lest it sti­fles in­no­va­tion,” the or­der said.

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