Flipkart's Big Billion Day under ED scanner

A separate probe on Flipkart is underway since 2012 for alleged FEMA violation

The Enforcement Directorate (ED) will probe if any norms were violated during the Big Billion Day sale of Flipkart last week. According to sources, the directorate has sent a letter to Flipkart on the basis of complaints received after the Big Billion Day sale on October 6.

The ED is investigating whether any norms were violated during the sale day or not, though sources claim that no evidence has been found against the e-tailer so far. A separate probe on Flipkart is underway since 2012 for alleged violation of the Foreign Exchange Management Act (FEMA).

Flipkart did not specifically comment on the matter but said the company was in “complete compliance with the laws of the land and will cooperate with authorities when required”. After the Big Billion Day sale, many consumers were left disgruntled because of poor consumer experience and inflated prices. The popular response to the sale also left competitors bitter with the traditional traders’ lobby complaining to the department of industrial policy and promotion, seeking policy intervention. Among others, Future group CEO, Kishore Biyani, attacked e-commerce players for undercutting prices and heavy discounting “against the law of the land”.

The Competition Commission of India has initiated a preliminary enquiry into the matter, but there are indications that there may not be a case of predatory pricing against Flipkart. On the ED probe initiated in 2012, sources say that the company has not yet been served with any notice for a possible fine for FEMA violations. But industry insiders say that Flipkart could be served with a notice of about Rs 1,000 crore soon. In 2012, Flipkart followed the inventory model, and later shifted to the marketplace. The company has foreign investors on board and the current FDI policy prohibits foreign investment in e-commerce. Flipkart went through a restructuring phase where it converted itself into a marketplace bringing thousands of small and medium sellers online, calling itself a technology platform rather than a retailer.