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Keeping a close watch: CCI warns online retailers against unfair practices

All eyes on Bezos' visit this week as traders up the ante

Ruchika Chitravanshi & Neha Alawadhi  |  New Delhi 

ecommerce
Coinciding with the hardening stand of the CCI, small traders too have intensified their protest against e-commerce majors, mainly Amazon and Walmart-owned Flipkart

The Competition Commission of India (CCI) has sent out a strong warning to e-commerce players against unfair practices, saying it’s keeping a close watch and will investigate the “phenomenal’’ online sale of mobile phones. Pointing out that the opaque behaviour of dominant e-commerce companies was hurting the fate of brick-and-mortar stores, CCI Chairman Ashok Gupta indicated on Saturday that he meant action.

The warning by the anti-trust watchdog has come days ahead of founder Jeff Bezos’ India visit, about which the Seattle-headquartered company has been tight-lipped. Sources in the know indicated that Bezos, coming on a short trip, has sought a meeting with Prime Minister Narendra Modi.

Coinciding with the hardening stand of the CCI, small traders too have intensified their protest against e-commerce majors, mainly and Walmart-owned The Confederation of All India Traders (CAIT), representing thousands of small businesses, has threatened to protest across 300 cities in the country when Bezos arrives.

Gupta, while addressing a PHD Chamber’s conference, asked e-commerce platforms to put their house in order amid growing concerns from the retail sector, which fears further erosion of business due to the deep discounts offered by technology-driven online market players. Specifically, exclusive tie-ups between the online market players and certain sellers have been a bone of contention. This has been building up for sometime.

The CCI had earlier taken cognizance of a complaint filed by Delhi Vyapar Sangh, a trade body, against sale of mobile phones on e-commerce platforms. In fact, in a recently released study on the market place model, it advised self-regulation for e-commerce players, while asking them to remove deficiencies that gave them an unfair advantage vis-à-vis others.

Gupta said the Commission was working with all the stakeholders to remove information asymmetry and improve transparency to positively increase competition. He said that while time should be given to e-commerce players to carry out the necessary steps to remove such deficiencies, the CCI can take “suo moto action” if any such concern came to its notice.

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“The CCI is keeping a close watch...Competition law as it stood had provisions that were adequate to deal with the emergence of e-commerce as also technology-driven products thrown up by innovations from time to time,” Gupta said. He said that the proposed changes to the Competition Law by the review committee would strengthen the legislation further and bring it in tune with current day requirements.

The e-commerce sector is estimated to touch $200 billion in market size by 2026 from $38.5 billion at present, according to CCI.

In its study released on Wednesday, the watchdog had said that the issues it had identified may have a bearing on competition, or may hinder the realisation of the full pro-competitive potential of e-commerce.

“Some of the issues in specific circumstances may have a potential to contravene the provisions of the Competition Act, 2002 (‘the Act’), which shall be the subject matter of case-by-case determination by the Commission.”

Last October, CCI had launched an investigation against Oyo Hotel & Homes and MakeMyTrip (MMT-Go) on charges of predatory pricing, creating a monopoly and deep discounting.

The marketplace platforms should bring out a clear policy on discounts, CCI has argued. This would include the basis of discount rates funded by platforms for different products or suppliers and the implications of participation or non-participation in discount schemes.

First Published: Sat, January 11 2020. 23:23 IST
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