Are Amazon, Flipkart, Zomato, OYO, others flouting data, discounts, reviews norms? CCI says no more

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Updated: January 9, 2020 12:52:19 PM

The Competition Commission of India (CCI) on Wednesday asked top platforms across multiple sectors such as e-commerce, food, hospitality etc for a ‘clear and transparent’ policies around discounting, data sharing, reviews etc.

The study initiated by CCI in April last year focuses on competition among online platforms.

The Competition Commission of India (CCI) on Wednesday asked top platforms across multiple sectors such as e-commerce, food, hospitality etc for a ‘clear and transparent’ policy on data being collected on their respective platforms, what is the use of such data and sharing of data with third parties or related entities. CCI also asked the leading marketplaces for clear policies on discounts including the “basis of discount rates funded by platforms for different products/suppliers among other things and the implication of participating or not participating in discount schemes,” the report titled Market Study on E-commerce in India: Key Findings and Observations said. The study initiated by CCI in April last year focuses on competition among online platforms in e-commerce, sellers, service providers such as hotels and restaurants, payment service providers etc.

The study comes amid past and present concerns of associations representing various industries and sectors along with traders’ community such as CAIT, NRAI, FHRAI etc. that have repeatedly alleged unethical trade practices by platforms such as Flipkart, Amazon, Zomato, Swiggy, OYO etc. in business. For instance, CAIT has been alleging FDI policy violation by Amazon and Flipkart by indulging in predatory pricing and deep discounting impacting businesses of retailers and traders. On the other hand, NRAI and FHRAI have blamed Swiggy and Zomato for alleged deep discounting practices and similarly against OYO for alleged breach of contracts, non-payments, arbitrary change in commission rates etc. “The deep discounting practice of platforms, according to the majority of small and mid-segment restaurants and hotels, is raising serious viability concern,” the report said.

“The marketplace model of e-commerce is designed to specifically empower local businesses, particularly MSMEs, artisans, traders allowing them to benefit from economies of scale and access a pan-India customer base free of geographical constraints in an efficient, cost-effective and transparent manner. As India’s millions of MSMEs and retailers look for ways to grow and build their businesses, e-commerce offers them a guaranteed route to success,” Rajneesh Kumar, SVP and Chief Corporate Affairs Officer, Flipkart Group told Financial Express Online. “A democratizing force, it empowers sellers, regardless of size or background, and creates a level playing field. Increased adoption of a marketplaces’ efficient, transparent and accessible model will propel true growth and prosperity for India’s seller community, the retail sector and the nation. At Flipkart, we are proud to be creating enormous value for lakhs of sellers, Artisians and MSMEs. Helping them leverage innovation and technology and creating lakhs of new jobs in the country,” he added. 

An Amazon spokesperson said the company welcomes the initiative by CCI to conduct a study to better understand the functioning of e-commerce in India even as they are reviewing the contents of the study.

Comments from Zomato and OYO will be updated as and when received.

Also read: Paytm adds payment mode that PhonePe, Google Pay don’t have; launches one QR for all digital payments

Among other transparency measures urged by CCI to e-commerce companies is to provide a general description of the main search ranking parameters in its terms and conditions. It also asked to describe the possibilities, if exists, to influence ranking against direct or indirect remuneration paid by business users and its effect on ranking. CCI has also direct such platforms to ensure transparency with respect to user reviews and ratings “Reviews for only verified purchases to be published and mechanisms to be devised to prevent fraudulent reviews/ratings,” it said.

“The three elements, which according to the business users of the platforms, are susceptible to manipulation/exploitation by platforms, are search results, sellers’/service providers’ data and user review/rating mechanisms,” the report noted. In absence of a formal determination of a violation of the provisions of the Act, boosting transparency in such areas can help lower information asymmetry. This can lead to a positive influence on competition on the platform and between different platforms.

(The story was updated with comments from Flipkart and Amazon.)

 

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