Walmart's Flipkart tells court it offers lower fee if sellers cut prices

Flipkart and Amazon are in a court battle against the CCI bid to restart an investigation into their business practices, after a judge in early June dismissed the companies' pleas.

Walmart’s Flipkart sees nothing wrong in offering to cut charges for sellers on its platform if they lower product prices, its lawyer told a court on Monday, drawing protest from a retailer group challenging the practice.

Flipkart and Amazon are in a court battle against the Competition Commission of India's (CCI) bid to restart an investigation into their business practices, after a judge in early June dismissed the companies' pleas.

Both Flipkart and Amazon have for years battled accusations from brick-and-mortar Indian retailers that they bypass the foreign investment law by favouring some sellers and influencing prices of products, which are prohibited. The companies say they comply with all laws.

Arguing against the resumption of the antitrust investigation, Flipkart's counsel Harish Salve told a two-judge Bench in the southern state of Karnataka that he sees nothing wrong in telling the sellers of Flipkart marketplace that they will be charged a lower fee, if they reduce their prices.

Referring in particular to the Hindu festival of Diwali when websites organise sales, he added: "I tell my sellers at a time like Diwali if you reduce your prices, I will give you a reduction in rent. What's wrong?"

The comments drew immediate criticism from the Confederation of All India Traders, which is party to the ongoing litigation opposing the e-commerce giants, saying the practices were prohibited under India's foreign direct investment (FDI) rules.

The comments “clearly corroborate the view and complaints made by CAIT time and again. FDI policy specifically provides that marketplace should not influence prices”, said Praveen Khandelwal, secretary general of CAIT, which represents 80 million retail stores in the country.

India’s foreign investment law for e-commerce says "entities providing (a) marketplace will not directly or indirectly influence the sale price of goods or services".

A Reuters investigation in February based on internal Amazon documents showed the US firm has for years given preferential treatment to a small group of sellers, doling out discounted fees and lowering the platform fees for some to enable them to offer more competitive prices.

Amazon has said it “does not give preferential treatment to any seller”.