CCI's New Rules To Assess "Predatory" Ecommerce Behaviour

SUMMARY

The new norms envisage a “sector-agnostic” framework that is flexible and adaptable to various industries, including the digital economy to assess the “cost of production”

The new norms also allow for case-by-case assessment to enable the CCI to consider evolving dynamics of digital markets while evaluating alleged predatory conduct

This comes at a time when a host of ecommerce and quick commerce platforms are under the radar of CCI over alleged unfair pricing and market monopolisation

The Competition Commission of India has notified new rules for determining the “cost” of goods and services to effectively evaluate alleged predatory pricing practices in ecommerce and quick commerce sectors.

Called Competition Commission of India (Determination of Cost of Production) Regulations, 2025, the new norms envisage a “sector-agnostic” framework that is flexible and adaptable to various industries, including the digital economy to assess the “cost of production”.

The new norms also allow for case-by-case assessment to enable the CCI to “consider the unique features and evolving dynamics of digital markets when evaluating alleged predatory conduct” instead of prescribing sector-specific metrics.

“Some stakeholders expressed concern that the draft Regulations lack clarity on how the Commission will assess costs in different sectors viz. digital markets. In response, the Commission notes that the Cost Regulations 2025 establish a sector-agnostic, cost-based framework that is flexible and adaptable to various industries, including the digital economy,” added CCI in the background note.

Under the new framework, average variable cost will serve as the primary benchmark for identifying predatory pricing. However, the Commission will have the right to use alternative cost measures such as average total cost, average avoidable cost, or long-run average incremental cost (LRAIC) to comprehend market dynamics based industry specifics and case complexities.

Additionally, the companies, being scrutinised, will have the right to challenge cost assessments by engaging independent experts at their own expense.

The new norms come at a time when the government has stepped up the scrutiny of ecommerce and quick platforms in the country for allegedly indulging in deep-discounting tactics and anti-competitive behaviour.

Last year, CCI internally found ecommerce giants Amazon and Flipkart guilty of violating competition laws by giving preference to select sellers on their platforms. Following this, many sellers of Amazon and Walmart-owned Flipkart filed petitions in HCs the country, challenging various aspects of the CCI’s probe. The case is now pending before the Supreme Court (SC).

On the other hand, the watchdog last month also asked retailers body All India Consumer Products Distributors Federation (AICPDF) for details on the relevant market share of each of the quick commerce players in the fast-moving consumer goods (FMCG) space.

This came after AICPDF moved the CCI seeking a probe into the alleged pricing tactics and market monopolisation behaviour of the major ecommerce and quick commerce platforms in the country.