Trouble for Flipkart continues as NCLAT issues probe for alleged abuse of dominant market position

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Updated: March 4, 2020 12:29:18 PM

The National Company Law Appellate Tribunal (NCLAT) on Wednesday asked the Director General at the Competition Commission of India against Flipkart for the alleged use of its dominant position.

Flipkart, Indian retail industry, local kirana stores, Flipkart chief, Competition Commission of India, MSMEIn November 2018, AIOVA had alleged abuse of its market position in e-commerce.

The National Company Law Appellate Tribunal (NCLAT) on Wednesday asked the Director General at the Competition Commission of India against Flipkart for the alleged use of its dominant position and use of unfair practices in the market, according to traders’ body CAIT. “We understand that the NCLAT has issued an order in relation to the AIOVA appeal. We are currently awaiting a copy of the order,” a Flipkart spokesperson told Financial Express Online. In November 2018, the All India Online Vendors Association (AIOVA) had alleged abuse of its market position in e-commerce by Flipkart India Private Limited and favouring select sellers through unfair pricing.

However, CCI had quashed AIOVA’s claim in its November 2018 order saying “Flipkart India is not dominant in the relevant market of “Services provided by online marketplace platforms for selling goods in India”; therefore, the issue of abuse of dominant position does not arise,” the copy of which was seen by Financial Express Online. CAIT’s secretary general Praveen Khandelwal informed that the order for the new probe will be out on Wednesday.

Comments from AIOVA are awaited for this story.

In response to CCI ruling out Flipkart in its order, AIOVA had filed an appeal in the NCLAT which was admitted by latter in May 2019. AIOVA had alleged, as per the CCI order, that Flipkart acquires products and sells them to WS Retail Services Private Limited at a discount which would then sell as sellers on the Flipkart.com and hence, was allegedly in contravention of Section 4 (2) (a) of the Competition Act. AIOVA also claimed Flipkart to sell goods at a discounted price because they have access to VC funds and are financially backed by big investors that deprive individual sellers of market access as they are not backed by VCs.

Flipkart and Amazon have been facing flak from associations such as AIOVA and CAIT for alleged violation of the FDI policy by controlling the inventory and influencing the prices of products sold on their marketplaces. The Karnataka High Court had last month stayed the CCI’s probe into Amazon and Flipkart after traders’ body Delhi Vyapar Mahasangh had complained to CCI in January for alleged brand partnerships on exclusivity along with the above reasons. Amazon had said that CCI order was “only an inference without any factual backing.”

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