Govt panel set to probe e-tailers’ big discounts
Areview of the competition law seeks to find out whether the steep discounts offered by e-tailers promotes competition or stifles it as alleged by offline retailers.
A 10-member panel set up by the corporate affairs ministry last week will examine the trends in digital commerce, including steep discounts, and whether the e-tailers have restricted access to dealerships from manufacturers.
Conventional retailers are strongly opposed to discounts offered by online sellers arguing that it is aimed at displacing offline dealers and will eventually affect consumer interest. “Practices in the digital economy, backlog of competition cases to be resolved and the fee structure followed by the Competition Commission of India will be reviewed by the panel,” one person privy to the initial consultation process, said on the condition of anonymity. The panel will also comb through central and state government policies that do not foster principles of competition in letter and spirit.
Brick-and-mortar traders are also readying their recommendations to the panel seeking to put an end to discounted online sales. “We strongly oppose discounts offered by online retailers. These are not discounts but predatory pricing. We will be requesting the commerce minister to impose a blanket ban on discounted sales by online sellers, which creates uneven playing field and is detrimental to traditional retailers and manufacturers. We are formulating our views and will submit it before the review committee,” said Praveen Khandelwal, secretary general, Confederation of All India Traders (CAIT).
Competition law experts said that industry practices, such as manufacturers imposing restrictions on online sellers to protect conventional dealers have been a subject of dispute. In cases where certain brands face intense competition from rival brands, restrictions imposed by a producer on online dealers to protect its conventional dealers may not be seen by the competition watchdog as anti-competitive. This, however, enables producers to control the retail price and may not be in the interest of consumers.