Before it begins a national campaign against ecommerce majors like Amazon and Walmart-backed Flipkart scheduled from September 15, the Confederation of All India Traders (CAIT) which is the top traders’ body has written to the Competition Commission of India (CCI), demanding immediate steps for aggressive investigation into the business model of both Amazon and Flipkart in reference to complaints of dominance and non-competitive business practices.
In the letter addressed to Ashok Kumar Gupta, Chairperson of the CCI, the CAIT has once again accused the ecommerce giants of “manipulating the market and slowing down the process of turning rules into law”, thereby “killing the competition and violation of rules as stated in Press Note 2 of the FDI policy, 2018 of the Government of India, which are the assisting factor for their dominance in e-commerce business of India”.
CAIT’s National President BC Bhartia and Secretary General Praveen Khandelwal said in the letter that the ongoing investigation by the CCI against Amazon and Flipkart must gain momentum now, after the Supreme Court declined to entertain a plea by e-commerce giants last month, saying they must face inquiry by the CCI for anti-competitive practices.
“It looks like that the investigation is being conducted at a snail’s speed and, in the meantime, both these companies are continuing with their business practices which are under the purview of investigation, resulting into creation of high uneven level playing field which is adversely affecting the fundamental right to work of the people and traders of India,” Bhartia alleged.
What Does CAIT Want
In the correspondence, CAIT has requested the CCI to direct both Flipkart and Amazon to continue their current business activities strictly as per the rules prescribed in Press Note No. 2 or direct them to suspend their operations during the course of the investigation. To restrain the ecommerce giant’s further abuse of dominant position, the CAIT has also requested “investigation officers to conduct search and seizure of all the concerned documents, computers, hard disk and other relevant data”.
To justify their demand, the CAIT has quoted that Section 41 of the Competition Act, read with Section 220 and 240A of the Companies Act, empowers the Director General of Investigation to conduct a search and seizure operation.
The CAIT has also announced a ‘Halla Bol’ campaign against the ecommerce giants from September 15. stating that Amazon and Flipkart are opposing new ecommerce rules and delaying the process of turning the rules into a law.
The Case Brief
Earlier in July, both Flipkart and Amazon challenged Karnataka High Court’s judgement to continue probe into anti-competitive practises conducted by the ecommerce giant in the Supreme Court. The apex court quashed the challenge and backed Karnataka HC to continue with the investigation. The complaint, which was originally filed by the Delhi Vyapar Mahasangh (DMV), stated that both Amazon and Flipkart of favouring certain sellers, exclusive partnership, heavy discounting and predatory pricing.
Where Does Ecommerce Giants Stand
The new ecommerce rules, which target customer protection and market regulation included ban on flash sales except of smartphones, providing domestic alternatives to consumers purchasing foreign products, appointment of grievance officers and a nodal contact person for 24×7 coordination with law enforcement agencies, removal of ‘related parties and associate enterprises’ as listed sellers on the platform, and more.
Besides Amazon and Flipkart, the new rules have also brought in concerns from ecommerce majors including Reliance Retail and Tata Group stating the rules will have a heavy impact on their trade.
It is now expected that the ecommerce players may need to revisit their strategy and encourage smaller players.