Predatory pricing: Amazon, Flipkart explain discounts to DPIIT officials

The leadership of e-commerce giants Flipkart and Amazon India met officials from the Department for Promotion of Industry and Internal Trade (DPIIT) on the allegations against them of predatory pricing made by the Confederation of All India Traders (CAIT).

The meeting, at the behest of the minister, Piyush Goyal, was convened by Shailendra Singh, additional secretary of the department. Goyal was to have chaired it but his schedule was changed before this.

“We had open and transparent discussion with DPIIT officials. We thank the government and particularly the Ministry of Commerce and Industry for the opportunity,” an Amazon spokesperson said.

According to sources, the two entities explained to DPIIT how discounting works on their platform. At issue was CAIT’s charge that their conduct during the recent festive sales had breached the country’s rules on foreign direct investment (FDI), which stipulates that such entities must only function as a marketplace.

CAIT was also supposed to have a meeting with DPIIT but stayed away on learning that the minister would be unavailable. “Since the minister is fully aware of the matter that was explained to him on Wednesday by CAIT, we intend to hold further dialogues with him only. The court case filed by us against Amazon and Flipkart in the Jodhpur Bench of the Rajasthan High Court will come for hearing on October 15. The Union government, Enforcement Directorate and both companies have to submit their reply on the petition of CAIT before that,” said Praveen Khandelwal, secretary-general of the trader body.

CAIT had on Wednesday taken a delegation to the minister, including heads from the All India Mobile Retailers Association and All India Consumer Products Distributors Federation. “The minister firmly said the government is committed to implement the FDI policy in its letter and spirit. No predatory pricing or deep discounting will be allowed. Any re-routing of business in e-commerce will not be allowed,” Khandelwal had said after the meeting.

CAIT has given various items of evidence on predatory pricing, deep discounting, exclusivity and promoting of preferred sellers on the respective platforms of various e-commerce companies. It had told the minister that much against the FDI policy’s intention, e-commerce entities were greatly influencing the prices and creating an uneven playing field. Their delegation had asked for a government audit of the business models of e-commerce portals, including the amount of business done by sellers and the authenticity of that data. And, that as an interim measure, a ban be imposed on such e-commerce portals.