SUMMARY
Predatory pricing and deep discounting tactics by Shopee violate Competition Act, 2002
CAIT has accussed Shopee of being a ‘Chinese’ company, Shopee claims otherwise
Shopee operates primarily in Southeast Asia, claims to have 80 Mn daily active users on its platform worldwide
The Confederation of All India Traders (CAIT) has moved the Competition Commission of India (CCI) seeking action against ecommerce firm, Shopee.
The trade body has shot off a letter to the CCI, claiming that the ‘Chinese’ ecommerce giant was indulging in predatory pricing and deep discounting tactics to undermine local competition. The letter also stated that the ‘tactics’ employed by Shopee violated the Competition Act, 2002.
Interestingly, the ecommerce firm claims to be a Singapore-based company.
CAIT Chairman, Praveen Khandelwal, said that Shopee is offering hefty discounts on various products by selling them at an extremely low price, thereby hampering other competitors and adversely impacting the Indian marketplace.
Khandelwal further added, “Such predatory pricing is being done with a calculated view to eliminate the traditional and small scale businesses in the country. Thus, Shopee is conducting its business in India in violation of provisions of the Competition Act, 2002.”
CAIT also accused Shopee of selling products at throwaway prices that range from INR 1 to INR 49. The trade body says that this “is nothing but a deliberate reduction in the prices to nonsensical and loss-making levels in the short-term, with a view to undercut and eliminate small businesses.”
The ecommerce portal has come out and refuted the allegations, saying it complies with local laws and regulations wherever it operates.
The ecommerce portal further added, “We share CAIT`s commitment to supporting and empowering India`s SMEs, and already serve thousands of local small businesses around the country who are connecting with consumers and growing their online businesses on our marketplace.”
Shopee operates primarily in Southeast Asia, including countries like Indonesia, Taiwan, Vietnam, Thailand, the Philippines, Malaysia, and Singapore. The platform claims to have more than 80 Mn daily active users worldwide. Back home, the company faces stiff competition from other major players like Amazon, Flipkart, among others.
The two sides have been at loggerheads with each other for the past one year. Earlier, in December last year, CAIT had urged Finance Minister Nirmala Sitharaman to ban Shopee, accusing it of being a Chinese company. The trade body had also claimed that the ecommerce firm was operating in India against FEMA Rules and FDI Press Note of 2020.
According to the 2020 rule, an entity of any country, which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only through the government route.
The rule was instituted in April 2020 amid fears over Chinese takeover of Indian firms.
In his previous letter, Khandelwal had also alleged that the Chinese investment firm, Tencent, had a significant stake in SEA Holdings, the parent company of Shopee. He had also claimed that Forrest Li, the founder of SEA, was originally a Chinese citizen and had become a naturalised Singaporean only a few years back.
This isn’t Shopee’s first brush with controversy. Barely days ago, an FIR was filed against the company by a Lucknow based customer for allegedly selling fake products.
In November last year, the Delhi High Court had asked Centre’s response on a plea that sought to block Shopee in the country.
It is pertinent to mention that the trade body has on numerous occasions written to the CCI, demanding investigation into the business practices of Amazon and Flipkart.
Founded in 1990, CAIT is an apex trade body representing 80 Mn Indian traders and over 40,000 trade associations. It also claims to be the world’s largest non-corporate SME organisation, aimed at promoting the welfare of brick and mortar retailers.
