Amazon and Walmart’s Flipkart exclusive launch of products in breach of antitrust Laws: CCI

Posted 18 Sep 2024

2 min read

Recently, antitrust investigations conducted by Competition Commission of India (CCI) found that Amazon and Flipkart violated local competition laws (anti-trust laws) by offering exclusive launches, giving preference to select sellers, prioritising certain listings, etc.

Anti-trust framework concerning e-Commerce in India

Competition Act, 2002 (amended in 2023): Aims at fostering competition, protecting anti-competitive practices, abuse of dominant position, and regulates combinations (mergers, amalgamations and acquisitions).
Consumer Protection (E-Commerce) Rules, 2020: Places liabilities on e-Commerce entities to maintain a level playing field, not to promote the sale of any produce, not use deceptive practices to influence consumer decisions, etc.

Restrictions on operation of e-Commerce entities in India

Restrictions on exclusive selling: No seller can sell its products exclusively on any marketplace platform and that all vendors on the e-Commerce platform should be provided services in a “fair and non-discriminatory manner”.
- Services include fulfilment, logistics, warehousing, advertisement, payments, and financing among others.
Restrictions on purchases by vendors: Any vendor who purchases 25% or more of its inventory from an e-Commerce group company will be considered to be controlled by that e-commerce company, and thereby barred from selling on its portal.

Models for offering e-Commerce Services

Inventory Model: Inventory of goods and services is owned by e-Commerce entity and sold directly to the customers.
- In India, FDI is not permitted in this model to protect India’s unorganized retail sector not capable of offering big discounts.
Marketplace Model: E-commerce entity provides a technology platform to act as a facilitator between buyer and seller (100% FDI is permitted under Automatic Route).