Deep discounts given by e-commerce sites a major area of concern: CCI study

Deep discounting on goods and services offered by large online retailers has emerged as a major area of concern in a study conducted by CCI, particularly in case of mobile phones, and the fair trade regulator will probe all cases of possible abuse of market dominance.

Releasing the findings of the study and its own observations, the the Competition Commission of India (CCI) said marketplace platforms need to adopt self-regulatory measures to address all areas of concern flagged in the study and also bring out clear and transparent policies on discounts.

The study, Market Study on E-Commerce in India, was initiated by the regulator in April 2019 with a view to better understand the functioning of e-commerce in India and its implications for markets and competition.

The study released on Wednesday found that issues like lack of platform neutrality, unfair platform-to-business contract terms, exclusive contracts between online marketplace platforms and sellers/service providers, platform price parity restrictions and deep discounts among others may directly or indirectly have a bearing on competition.

While highlighting competition issues, CCI said that the price points at which sellers sell the products on the marketplace platforms are in many instances lower than the cost price for the brick and mortar retailers.

These retailers maintain that they either have to match the online discounts at a significant loss or the online market would be foreclosed for them.

This was pointed out to be a particularly pressing concern in the case of mobile phones, where online markets constitute around 40 per cent of the total sales in the country.

Making observation about the goods category, the regulator said the issue raised by the sellers relates to online discounts on major goods platforms purportedly pushing the prices below cost and impairing the offline small retailers' ability to compete in certain product categories.

"The platforms denied any involvement in pricing," CCI said.

It further added that "unfair pricing contravenes the competition law under Section 4(2) of the Act when indulged in by a dominant enterprise."