Indian antitrust regulators have uncovered significant anti-competitive practices by ecommerce giants Amazon and Flipkart, according to confidential reports seen by Reuters. The Competition Commission of India (CCI) has determined that both companies engaged in preferential treatment of select sellers, skewing their platforms' search results to benefit favored partners.
These findings, detailed in separate reports of over 1,000 pages each, conclude that Amazon and Flipkart created ecosystems that allowed preferred sellers to gain higher visibility, effectively pushing other sellers out of the competitive landscape.
The CCI's investigation, which began in 2020, reveals that these practices included prioritising certain listings and offering deep discounts on products, particularly mobile phones. Such strategies, described as "predatory pricing," are said to have a devastating effect on competition, harming smaller retailers who cannot compete with the low prices offered by preferred sellers.
Both companies are also accused of providing these sellers with marketing and delivery services at significantly reduced costs.
The reports, dated 9 August 2024, found that the preferential treatment extended beyond mobile phones, affecting various product categories. Amazon and Flipkart have consistently denied any wrongdoing, maintaining that their practices align with Indian laws. The companies now have the opportunity to review the findings and submit objections before the CCI decides on any potential fines or penalties.
This investigation follows previous legal battles, with both companies attempting to obstruct the probe through court challenges. Despite these efforts, the Supreme Court in 2021 allowed the investigation to proceed. The findings come amid broader scrutiny of Amazon and Flipkart's business practices, with Amazon facing a similar antitrust lawsuit in the United States.
Commerce minister recently criticised Amazon for using investments to offset business losses, highlighting ongoing tensions between the ecommerce sector and local retailers. Amazon has pledged to invest USD 26 billion in India by 2030 and aims to drive USD 20 billion in merchandise exports from the country by 2025.
(Inputs from Reuters)
