Amazon and Flipkart Breached Competition Laws, Indian Regulators Report

An antitrust investigation has determined that U.S. retail giant Amazon and Indian marketplace Flipkart, owned by Walmart, violated local competition laws by favoring certain sellers on their platforms. According to confidential reports reviewed by Reuters, the investigation found that the two companies created a marketplace where preferred sellers were given priority in search results, disadvantaging smaller competitors.

The probe, led by the Competition Commission of India (CCI), was launched in 2020 to examine allegations that both Amazon and Flipkart were promoting select sellers with whom they had special business arrangements. According to Reuters, the CCI’s investigation involved over 2,700 pages of documentation, which culminated in separate reports for Amazon and Flipkart dated August 9. Both reports concluded that these companies engaged in anti-competitive practices, including boosting the visibility of specific sellers in search rankings, which ultimately sidelined ordinary sellers.

Per Reuters, the report on Amazon, which spans 1,027 pages, and the 1,696-page document on Flipkart both state: “Each of the anti-competitive practices alleged… were investigated and found to be true.” The reports further elaborated that regular sellers were essentially reduced to mere “database entries,” with little chance of competing against the preferred vendors.

Neither Amazon nor Flipkart, nor the CCI, have provided an immediate response to these findings. Both companies have consistently denied any wrongdoing in the past, asserting that their practices align with Indian law. They will now have the opportunity to review the findings and file objections before any potential penalties are decided.

Related: India’s Commerce Minister Criticizes Amazon for Alleged Predatory Pricing

This ruling represents yet another setback for Amazon and Flipkart, who have faced increasing criticism from small retailers across India. These smaller players argue that their businesses have been severely impacted by deep discounts offered online, often through sellers with preferential arrangements on these platforms.

The investigation originated from a complaint filed by the Delhi Vyapar Mahasangh, an association of brick-and-mortar retailers. The CCI probe gained further momentum following a 2021 Reuters investigation that revealed Amazon had, for years, granted preferential treatment to a select group of sellers. Indian investigators conducted raids on several of these vendors as part of their inquiry.

Amazon and Flipkart remain dominant forces in India’s burgeoning e-commerce market, which consultancy Bain & Company estimates was worth between $57-60 billion in 2023, with projections to exceed $160 billion by 2028. Despite their stronghold, the companies’ operations have drawn increasing scrutiny, both in India and abroad.

In the United States, the Federal Trade Commission (FTC) has filed a lawsuit against Amazon, accusing it of using “anticompetitive and unfair strategies” to maintain its dominance. Amazon has rebutted these claims, arguing that the lawsuit could harm consumers by driving up prices and slowing down deliveries.

Per Reuters, the latest findings from India’s antitrust investigation will likely intensify calls for greater regulatory oversight of major e-commerce platforms in the country, as the debate over their market practices continues.

Source: Reuters