India’s Antitrust Report: How Did Amazon and Flipkart Violate Competition Laws

Investigations by the Competition Commission of India (CCI) have revealed that global giants Amazon and Walmart-owned Flipkart violated local antitrust regulations. According to Reuters, the companies engaged in practices such as giving preference to select sellers, promoting certain listings, and offering steep discounts—activities that have hurt other businesses.

The findings are detailed in two confidential reports from the CCI, which were reviewed by Reuters. Despite the severity of the allegations, Amazon, Flipkart, and the CCI have not yet provided any comments on the reports.

Preferred Sellers and Unfair Treatment

According to Reuters, the CCI reports indicate that Amazon and Flipkart favored a select group of sellers on their platforms, providing them with significant advantages in terms of marketing and logistical support. Amazon reportedly had six preferred sellers, while Flipkart gave preference to 33 sellers. These sellers received services like warehousing and marketing at “miniscule costs,” giving them a major competitive edge.

The CCI noted that both companies used foreign investments to offer these subsidized rates, creating a marketplace where no other seller, outside of their preferred group, could survive. This ecosystem left other sellers struggling to compete, significantly distorting the competitive landscape, per Reuters.

Preferential Listings at the Expense of Others

The investigation also revealed that products from preferred sellers frequently dominated the top spots in search results on Amazon and Flipkart. Reuters reported that this practice created a significant barrier for other sellers trying to gain visibility on the platforms. The CCI highlighted that these preferential listings hurt competition by making it nearly impossible for smaller, independent sellers to thrive.

Exclusive Launches Harming Retailers

Amazon and Flipkart also entered into exclusive partnerships with smartphone and technology manufacturers to launch products exclusively on their platforms. These partnerships, according to the CCI, further marginalized smaller retailers, including brick-and-mortar stores.

Related: Amazon and Flipkart Breached Competition Laws, Indian Regulators Report

Per Reuters, the CCI found that these exclusive launches had a ripple effect across the retail sector. Not only did small-scale sellers suffer, but physical retailers were particularly disadvantaged, as they received the latest devices much later than their online counterparts. This left them with fewer opportunities to compete effectively.

Deep Discounting to Drive Out Competition

One of the most significant findings in the CCI reports was the practice of deep discounting. Both Amazon and Flipkart allowed their preferred sellers to offer products at significantly reduced prices, often below cost. According to Reuters, the aim was to drive out competition by undercutting prices, making it difficult for other sellers to remain competitive.

This practice of deep discounting did not only harm individual sellers but also had broader implications for the market, as it allowed a select group of sellers to dominate, pushing out smaller competitors.

What Lies Ahead?

While the CCI’s findings paint a troubling picture of the competitive practices of Amazon and Flipkart, the investigation’s next steps remain uncertain. The companies have yet to respond to the allegations, and the reports have not been made public. It remains to be seen whether further legal action will be taken and what penalties, if any, the two e-commerce giants may face.

Source: Reuters