 "FMCG distributors write to CCI over unfair practices by quick commerce cos")
The fast-moving consumer goods (FMCG) distributors’ association has written to the Competition Commission of India (CCI) flagging unfair practices, such as predatory pricing, deep discounting, and monopolistic tendencies, by quick commerce (q-com) players.
The All India Consumer Products Distributors Federation (AICPDF) has also expressed concerns over the operational model of q-com platforms in relation to the country’s Foreign Direct Investment (FDI) regulations. It pointed out several challenges faced by the traditional supply chain due to the rapid growth of quick commerce, particularly the appointment of these platforms as direct distributors of FMCG items by various companies.
This issue was first raised by the traditional distribution channel with the government in August. The AICPDF had written to the Ministry of Commerce and Industry on the rapid growth of the quick commerce industry, which it said was hurting traditional trade.
In September, the Department for Promotion of Industry and Internal Trade (DPIIT), which operates under the Ministry of Commerce and Industry, referred the matter to the CCI.
According to the letter accessed by Business Standard, the distributors’ body said: “Q-com platforms operating dark stores appear to intentionally bypass regulations governing inventory-based e-commerce.” By exercising significant control over their inventory, the association said, these platforms seem to violate the law in both letter and spirit.
The AICPDF further pointed out that predatory pricing, deep discounting, and monopolistic tendencies lead to unfair competition, making it impossible for traditional retailers to compete or survive.
The letter also highlighted that many q-com platforms have expanded using franchise models without sufficient due diligence. “We strongly urge the creation of a standard Franchise Act, similar to franchise laws in the USA, to protect the rights of franchisees,” it said, explaining that current franchise agreements are often one-sided and exploit the lack of legal frameworks for franchisee protection in India.
Additionally, the letter raised concerns previously shared with the Ministry of Health and Family Welfare and the Ministry of Road, Transport, and Highways regarding the use of private vehicles for food delivery and corporate purposes.
The trade body has requested that the CCI initiate a comprehensive investigation into the operational model of q-com platforms and implement protective measures for traditional distributors and small retailers. It has also sought to facilitate a dialogue among all stakeholders, including FMCG companies, q-com platforms, traditional distributors, and small retailers.
Concerns raised
- Predatory pricing, deep discounting, and monopolistic tendencies threatening traditional retail
- Platforms expand using franchise models without sufficient due diligence
- Platforms operating dark stores appear to bypass regulations governing inventory-based e-commerce
- Operational model of platforms flouting FDI regulations