After Uber and Ola were let off, it was the turn of Flipkart and Amazon to receive a thumbs-up from the Indian competition regulatory authority. Competition Commission of India delivered an order in response to a complaint by All India Online Vendors Association (AIOVA) saying that neither Flipkart nor Amazon enjoyed any dominant status in India.
The 2000 members-strong body representing sellers who sell on the ecommerce platforms had raised the issue of preferential treatment being given by Flipkart to particular sellers on its platform, which contravened Section 4 of the Companies Act that deals with abuse of dominant position in the market. CCI did not accept that argument either.
It felt that in the overall retail segment, the online business contributes a very small component and being a nascent and evolving business, it may not be prudent to make any interventions at this stage.
“…Looking at the present market construct and structure of online marketplace platforms market 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,” the order stated.
Given the growth potential of the industry, CCI opined that “any intervention in such markets needs to be carefully crafted lest it stifles innovation stopped.”
CCI has referred to the technology-based models that are emerging in the ecommerce space and they need to be encouraged and not discouraged at this juncture.
Some of the charges levelled by AIOVA in its complaint to CCI include one which says Flipkart uses its dominant position to favour select retail sellers on their platform by offering discounts, which is not given to other sellers. Another issue raised is that Flipkart has entered into manufacturing arrangements with certain private brands. The sellers of these brands, in return, are offered better terms to sell their products which amounts to contravention of the relevant laws governing competition. Interestingly, the AIOVA complaint was targeted only at Flipkart but CCI deiced to rope in Amazon as well. Of course, the same body had filed a separate complaint against Amazon also on almost similar grounds of preferential treatment being given to 2 retailed Cloudtail and Appario.
The traders’ association has now decided to appeal the order by the CCI. Chanakya Basa, who appeared as counsel for AIOVA tweeted post the order saying that while CCI says in its order that Flipkart isn't the dominant player in the relevant market, Flipkart by their own admission claim they are dominant.
One additional point in the Flipkart case was that one of the retailers WS Retails Services Private Limited mentioned as being given preferential treatment being given by Flipkart had ceased to be a seller on Flipkart since April 2017 and whatever agreement was there only till 2012.