CCI Is Probing Alleged Nexus Between E-commerce Firms and Sellers, Says Report

The Competition Commission of India (CCI) on Friday, 17 December, suspended Amazon's 2019-deal with Future Group, after it reviewed allegations that the US e-commerce giant had concealed information while seeking regulatory approval.

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The investigative arm of India's antitrust watchdog, Competition Commission of India (CCI), is reportedly reviewing documents that suggest a nexus between leading e-commerce firms and their "preferred sellers".

These papers were found during the raids in April, which were carried out after allegations of violating competition law were leveled against Amazon and Flipkart, The Economic Times reported, quoting sources.

The director general's office was scheduled to complete its investigation by the first week of June, but has now asked for more time because "some important data" seized during the raids needs to be analysed, according to the report.

As part of its investigation, CCI is looking into deep-discounting and instances of e-commerce companies owning a stake in vendors.

The Story so Far

In 2020, the Delhi Vyapar Mahasangh (DVM) had approached the CCI alleging that Flipkart and Amazon were violating competition law by abusing their market dominance.

DVM, which represents small and medium business, argued that e-commerce platforms have arrangements to promote their so called "preferred sellers", negatively impacting the "non-preferred" sellers.

It also alleged that e-commerce platforms own stakes in some of the online vendors on their platform, which is prohibited under the foreign investment rules for e-commerce.

Amazon and Flipkart filed petitions seeking a stay on the CCI probe, which were rejected by the Karnataka High Court in July 2021. The e-commerce majors then appealed against the probe in the Supreme Court, which again shot them down.

Competition Law To Be Updated Soon

CCI, which has often been held back from investigating anti-competitive activities due to existing regulations, is looking to expand its powers.

Big mergers and acquisitions of digital businesses could soon require the regulator's approval, reports suggest.

Companies currently must seek the CCI’s approval with relation to asset size and turnover, but planned amendments to the Competition Act could add “deal size” or “deal value” as an additional criterion, according to Business Standard.

This would allow it to scrutinise big deals in the digital sector, like the Facebook-WhatsApp merger, which involve a huge customer base and not necessarily a significant turnover.

The regulator has already been putting increased pressure on big technology firms like Google, Apple and Facebook.

(With inputs from The Economic Times and Business Standard)