Competition Commission of India has concluded that Business Practices of Flipkart and Amazon are not in violation of the competition norms and rejected the allegations of abuse of market dominance made by a grouping of the online vendors.
Commission in its ruling has made it clear that any intervention in evolving e-commerce market place needs to be “carefully crafted” to ensure that innovations are not stifled.
Competition Commission of India’s (CCI) decision came on a complaint filed by All India Online Vendors Association, which is a association of over 2,000 sellers on various e-commerce market places.
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 e-commerce marketplace business under the brand name Flipkart.com, as per details available with the CCI.
To assess the merits of complaint, CCI considered ‘services provided by online marketplace platforms for selling goods in India’ as the relevant market.
In its order, dated November 6, Commission stated that looking at 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 stated 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 (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017.
Though complaint was filed against Flipkart entities, CCI stated that 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.