As Flipkart and Amazon try to quash India's antitrust investigation, trader lobbies accuse them of 'monopolising e-commerce'

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As Flipkart and Amazon try to quash India's antitrust investigation, trader lobbies accuse them of 'monopolising e-commerce'
Business Insider
  • Amazon, Flipkart have filed their respective pleas and the matter is likely to be heard this week.
  • Lobby groups and Indian traders have accused the e-commerce giants of business malpractices and policy violations.
  • A report published earlier this year had highlighted that only two sellers made about one-third sales on Amazon.
Walmart-owned homegrown e-commerce giant Flipkart and rival Amazon have separately challenged Competition Commission of India’s (CCI) decision to launch an antitrust investigation into their business practices. Notably, the companies have denied any wrong doings in their respective appeals. The antitrust investigation would look into the alleged policy violations and anti-competitive behaviours by both Amazon and Flipkart.

Flipkart filed its appeal on June 16 in the Karnataka High Court. Details of Amazon’s appeal are not out yet. The development was first reported by Reuters citing sources it did not name. The publication has further revealed that both the matters will be heard by a two-judge panel this week.

"Irreparable injury will be caused to the appellant if the investigation was to continue pending the present appeal," Flipkart reportedly said in its appeal and urged the court to quash the initial CCI order for the investigation. Amazon, too, mounted similar challenges.

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Meanwhile, sources aware of the development told the publication that CCI planned to speed up the investigation on big tech players this week. The competition watchdog also plans, as per the report, to demand information from Flipkart and Amazon, based on the accusations raised on their business models.

Several lobby groups like the Confederation of all India Traders (CAIT), All India Online Vendors Association (AIOVA) have accused these e-commerce giants of eating into their business with predatory policies, deep discounting and business malpractices. The associations have also called them out for violating Foreign Direct Investment (FDI) policy, Foreign Exchange Management Act (FEMA) and devoiding the government of taxes.

Another report published in February 2021 had highlighted similar violations on the part of Amazon. The report noted that two sellers — Cloudtail and Appario — in which Amazon had indirect stakes made up around 35% of the platform’s revenue through sales in 2019. Overall, just 35 sellers on Amazon accounted for roughly two-thirds of all sales. This indicated a violation of Press Note 2 of FDI policies that bars e-commerce companies from giving preferential treatments to certain sellers.

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India’s federal financial crime-fighting agency Enforcement Directorate (ED) was also considering taking a look into these allegations after the Reuters’ report was published in February. In January 2021, ED along with the Reserve Bank of India (RBI) and ED were directed by the Department of Promotions of Industry and Internal Trade (DPIIT) to take “necessary actions” against Amazon and Flipkart for flouting FDI and FEMA rules.

The DPIIT’s direction of January 2021 was an aftermath of the protest and issues highlighted by CAIT. The association has also written to Piyush Goyal, the union minister of industry and commerce, seeking stricter actions against Amazon and Flipkart, “which are hell bent in monopolising e-commerce and retail trade with their unethical business practices”.


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