November 09, 2018

Flipkart's, Amazon's business practices do not violate competition norms: CCI


Rejecting allegations made by the All India Online Vendors Association (AIOVA), a group of 2,000 online sellers, regarding abuse of market dominance, the Competition Commission of India (CCI) concluded that Flipkart’s and Amazon’s business practices do not violate competition norms.

The CCI clarified, "Recognizing the growth potential as well as the efficiencies and consumer benefits that such markets can provide, the Commission is of the considered opinion that any intervention in such markets needs to be carefully crafted lest it stifles innovation."

AIOVA had alleged that Flipkart did not adhere to a section of India’s anti-trust laws which states that companies should not abuse a dominant market position through “unfair or discriminatory” pricing.

In this regard, the CCI said, “Looking at the present market construct and structure of online marketplace platforms market in India, it does not appear that any one player in the market is commanding any dominant position at this stage of evolution of market.”

In addition, the CCI observed that its “considered opinion” was that Amazon has also not broken the rules.

The CCI considered 'services provided by online marketplace platforms for selling goods in India' as the relevant market, as a step towards assessing the merits of the complaint.

The Commission stated that Flipkart marketplace is required to comply with conditions applicable to entities involved in the business of e-commerce, as set out in the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017. The CCI observed, "As such, Flipkart Internet is bound by these laws, the compliance of which is ensured by the relevant authorities."

The Commission thus concluded that there is no violation of Section 4 of the Competition Act which pertains to abuse of dominant market position.

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