Neither Flipkart, nor Amazon were violating Section 4 of the CCI Act, 2002, which disallows abuse of dominant position, the Competition Commission of India (CCI) has ruled.
The Commission noted that that going by the current structure of online market platforms as of now, no one player seems to be commanding a dominant share in the space. There was nothing to show that Flipkart holds a 40% market share as alleged by the All India Online Vendors Association even though it may be true Flipkart has access to large resources, the CCI said.
The association has said that Flipkart India Private, a wholesaler sells goods to WS Retail Services (owned by the founders of Flipkart Internet till 2012) — at a discounted price and thereafter, these goods are sold on the Flipkart marketplace.
Such practices amount to preferential treatment to certain sellers, the association claims. It says there is a conflict of interest between Flipkart India and Flipkart Internet which sell their own brands Smartbuy and Billion and other manufacturers selling on their platforms.
The Association has alleged that small vendors, rather than selling directly to consumers through the online ecommerce marketplace sites, have become allies of the big vendors and suppliers to leading sellers such as Cloudtail, WS Retail etc on the Flipkart and Amazon platforms.
In an important observation, the Commission noted that the marketplace based e-commerce model is still a relatively nascent and evolving model of retail distribution in India. It said it was cognizant of the technology-driven nature of this model. “Recognising the growth potential as well as the efficiencies and consumer benefits that such markets can provide, the Commission is of the considered opinion that any intervention in such markets needs to be carefully crafted lest it stifles innovation,” it said.
All India Online Vendors Association filed a case against both Flipkart India Private — a wholesale trader — and Flipkart Internet Private Limited — an e-commerce marketplace — alleging, inter alia, they had violated Section 4 of the Competition Act, 2002. The association is a group of more than 2,000 sellers selling on e commerce marketplaces.
The association had sought an interim order , in terms of the provisions of Section 33 of the Act restraining the alleged preferred sellers and brands from participating in the Big Billion Days sales and other sales events on Flipkart.com and related marketplace platforms until the final order.
The strategy of Flipkart India — the wholesaler — to acquire goods and sell them immediately to WS Retail Services Private Limited at a discount which would, in turn, sell such goods as sellers on the internet platform of Flipkart.com, was alleged to be in contravention of Section 4 (2) (a) of the Act.