CCI seeks DIPP views on discount norms for e-commerce marketplace with FDI

Competition Commission of India (CCI) has sought views of the commerce and industry ministry on deep discounts being offered by e-commerce marketplace platforms having foreign investments, in connection with the Walmart-Flipkart deal, sources said.

As per CCI, discounts being offered by such platforms distort prices of products which is against the guidelines prescribed for marketplace e-retailers having foreign direct investments (FDI).

As per the current guidelines, domestic e-commerce marketplace platforms having FDI can not directly or indirectly influence the prices.

E-commerce companies have maintained however that discounts on their platforms are being offered by sellers, who are free to run such schemes both in online and offline mediums.

"The CCI has sought the information from the Department of Industrial Policy and Promotion (DIPP), under the ministry. They have also sought views of the department on the Walmart-Flipkart deal in the context of the current FDI policy. In a weeks time, the DIPP is expected to respond," they said.

As per the FDI policy, 100 per cent overseas investments are allowed in e-commerce marketplace retailing.

Traders' body CAIT (Confederation of All India Traders) has several times raised concerns over the Walmart-Flipkart deal.

The traders body, in May, had said that it had approached the Competition Commission of India against the Walmart-Flipkart deal, stating that it will create unfair competition and an uneven level playing field for domestic players.

They had also alleged that this merger would create an unfair competition and uneven level playing field and will indulge in predatory pricing, deep discounts and loss funding.

In May, Walmart Inc had announced the acquisition of 77 per cent stake in Flipkart for about $16 billion (Rs 1.05 lakh crore) in the largest e-commerce deal which will give the US retailer access to the Indian online market that is estimated to grow to $200 billion within a decade.

Commerce and Industry Minister Suresh Prabhu had also stated that the Enforcement Directorate (ED) has been asked to look into the complaints related to alleged violation of foreign direct investment norms by some e-commerce players.

The ministry is also in the process of formulating a national e-commerce policy.