CCI Finds Flipkart & Amazon India Guilty Of Flouting Antitrust Rules

The Competition Commission of India (CCI) has reportedly found ecommerce giants Amazon and Walmart-backed Flipkart guilty of violating competition laws. 

As per two separate internal antitrust reports seen by Reuters, the competition watchdog found that both Amazon India and Flipkart flouted antitrust guidelines by giving preference to select sellers on their platforms. 

“Each of the anti-competitive practices alleged… were investigated and found to be true… Ordinary sellers remained as mere database entries,” read identical conclusions in both the reports.

While the two companies have previously denied any wrongdoings, both Amazon and Flipkart will now have time to review the report and file any objections before the CCI decides on the potential fines against them. 

In its report on Amazon, CCI reportedly alleged that preferred sellers on the ecommerce platform received “advantage in the (online) listing”, adding that a customer’s “attention” was drawn towards the listing when he/she searches for any product.

The watchdog also noted that the practice of preferential listings and deep discounting tactics employed by Amazon, especially with regards to sale of mobile phones, was causing a “catastrophic impact on the existing competition in the market”.

Meanwhile, with regards to Flipkart, the Commission said that preferred sellers were provided various services such as marketing and delivery at a “miniscule cost”. The watchdog added that such sellers were also “enabled” by Flipkart to sell phones with deep discounts, thereby foreclosing competition and leading to “predatory pricing”.

“The anti-competitive practices are not limited to sales of mobile phones. They are equally prevalent in other categories of goods,” both the reports said. 

This comes three years after the CCI, in 2020, ordered a probe against Amazon and Flipkart after receiving complaints from trade body Delhi Vyapar Mahasangh. The watchdog probed allegations that both the ecommerce platforms prioritised certain listings and promoted certain sellers with which the two companies had business arrangements.

The two companies legally challenged the probe multiple times, but the Supreme Court rejected their pleas to put the investigations on hold in 2021. Subsequently in 2022, the CCI conducted raids at the offices of the sellers of Amazon India and Flipkart. At the time, the CCI investigators reportedly collected emails, documents and data from computers at these premises.

The report comes close on the heels of union commerce minister Piyush Goyal lashing out at Amazon India over “predatory pricing policies” last month. Noting that the ecommerce major’s plans to invest billions of dollars in India were only to offset its losses, Goyal said that the funds were not “coming for any great service”.

However, right afterwards, he clarified that the government is not against online marketplaces but wants them to operate fairly.

With this, Amazon India and Flipkart have become the latest companies to come under the radar of antitrust authorities. While Google has had to pay hefty fines and undertake sweeping changes to its India operations in response to CCI’s crackdown, Apple too has been pulled up by authorities for abusing its dominance in the app marketplace segment.