Firms face pressure to offer deep discounts if they sell online: CCI study

In the hotels sector, smaller players use online sites to sell out most of their inventory while bigger brands use their own websites

The Competition Commission of India (CCI), the anti-trust watchdog, has said in a study that firms that use online platforms to sell their services or products have to face pricing pressure from the marketplace provider. 

The CCI did a study on e-commerce platforms in India in various sectors to understand how anti-competitive activity worked in the new economy space. It studied food delivery, hotels, and goods like mobiles sold online. These findings of this study were released at a workshop on e-commerce it organised. The study marked that 28 per cent of the revenue of food platforms were online and with the cloud kitchen format, restaurants were having to compete because many platforms tended to favour certain kitchens over others.

The CCI reported that online platforms did not share the algorithm used to show the presence of any restaurant on their sites. For the eateries, it has been noted that there are restrictions on using their own fleet to service customers. They need to use the platform’s fleet for this purpose.

In the hotels sector, smaller players use online sites to sell most of their inventories while bigger hotel brands use their own websites. Just like restaurants, hotels too are facing pricing pressure. For restaurants, the burden of discounts falls on them and not the site, but hotels are forced by online sites to set unviable prices. The third major group in the new economy is goods like mobiles and accessories. Here too, the sellers are forced to take part in discounts. They have reported to the CCI that if they do not participate in discounts by the online platform, their visibility and rank on the search engine are hit.

The CCI is studying this sector after it found that data was the most important thing in the economy now. Rajiv Kumar, vice-chairman of the NITI Aayog, cautioned people about the use of data by e-commerce platforms. Such use needs careful oversight because when combined with technology, it gives unprecedented market power to the platforms, which can be used as much for the benefit of consumers as it can be for harming them, he said at a workshop held by the CCI.