Traders’ body Confederation of All India Traders (CAIT) on Tuesday moved the Rajasthan High Court seeking a stay on festive sales by e-tailers Amazon and Flipkart for alleged violation of foreign direct investment (FDI) norms.
The HC has issued notices to the ministry of commerce and industry, Flipkart India and its marketplace entity Flipkart Internet, and Amazon Seller Services. It will further hear the case on October 15. Both Flipkart and Amazon are holding festive sales between September 29 and October 4.
In its petition, CAIT has alleged that e-commerce sites are influencing the prices of goods and services sold on their platform which violates the level playing field for other traders. The body claimed that both Amazon and Flipkart have been engaging in deep discounting, predatory pricing, loss-funding and controlling the inventory.
“…E-commerce entities have consistently tried to circumvent the law by routing the sales on its platform via its web of preferential sellers like WS Retail and other sellers, thus doing indirectly what they cannot do directly under the law. The same is against the letter and spirit of the laws and are are a blow to the FDI norms operating in India,” the CAIT plea, accessed by FE, stated. CAIT was represented by advocate Rajvendra Saraswat and advocate Abir Roy.
On its part, Flipkart rejected the allegations while Amazon did not offer any comments. “We’re unaware of the litigation and haven’t received any notice so far. We’re fully compliant with FDI laws. We are a marketplace player and work closely with lakhs of our sellers, artisans, and SMEs across the country, and help them connect with more than 160 million customers across India,” a Flipkart India spokesperson said.
With effect from February 1, the government tweaked the rules for FDI in e-commerce to prevent deep discounts being offered by large online marketplaces, Flipkart and Amazon and putting an end to e-commerce marketplaces dealing with exclusive vendor-partners.
The rules said a vendor will be considered controlled by an online marketplace entity if more than 25% of purchases of such a vendor are from the marketplace entity or its group companies.
Amazon and Flipkart, which jointly cover 80% of the domestic e-commerce market, have launched their six-day festive sales from September 29. Both companies claim it will be their “biggest sale ever”.