Exclusive Agreements with eCommerce site like Flipkart, Amazon does not violate Indian Competition Act

CCI rejects complaints against Flipkart, Snapdeal and other e-retail majors

New Delhi: The Competition Commission has rejected allegations of unfair business practices against five online retail majors -- Flipkart, Snapdeal, Amazon, Jabong and Myntra -- as it did not find any prima facie evidence of violations.

The complaints were filed against Flipkart India Pvt Ltd, Jasper Infotech Pvt Ltd, Xerion Retail Pvt Ltd, Amazon Seller Services Pvt Ltd and Vector E-commerce Pvt Ltd.

After looking into the matter for the past few months, the fair trade regulator has ruled that these entities did not violate competition norms by indulging in cartelisation or by abusing their dominant position.

Jasper runs Snapdeal.com, Xerion owns Jabong.com, while Vector is the company behind Myntra.com. Myntra has been acquired by Flipkart.com

"... the Commission is of the prima facie view that no case of contravention of the provisions of either section 3 or section 4 of the Act is made out against the opposite parties," it said in a 10-page order.

It was alleged that e-commerce websites and product sellers entered into exclusive agreements to sell products exclusively on select portals.

Welcoming the CCI decision, Snapdeal said the order is encouraging for the growth of the e-commerce sector.

"e-commerce in India is not just meeting the aspirations of millions of consumers but is also providing a nationwide market to small and medium sized enterprises and thereby helping them grow and expand their businesses," it said in a statement.

Flipkart spokesperson said: "We are totally committed to fair play and this decision further strengthens our belief."

In the recent months, there have been greater concerns that discount sales launched by various e-commerce websites, including Flipkart, were anti-competitive in nature.

With regard to exclusive agreements, the Competition Commission of India (CCI) said that such pacts need not result in appreciable adverse effect on competition.

"It does not seem that such arrangements create any entry barrier for new entrants. It seems very unlikely that an exclusive arrangement between a manufacturer and an e-portal will create any entry barrier as most of the products which are illustrated in the information to be sold through exclusive e-partners (OPs) face competitive constraints," the order, dated April 23, said.

Agreeing with the contention of the opposite parties, the Commission said that every product cannot be taken as a relevant market in itself.

"Irrespective of whether we consider e-portal market as a separate relevant product market or as a sub-segment of the market for distribution, none of the opposite parties seems to be individually dominant.

"There are several players in the online retail market which have been arrayed as opposite parties in present case, offering similar facilities to their customers," CCI said.

The regulator said it does not consider it necessary to go into the question of abuse of dominance by the opposite parties.

In his complaint, Mohit Manglani had alleged restrictive or unfair business practices by the e-portals and had cited the then exclusive availability of Chetan Bhagat's book 'Half Girlfriend' on Flipkart.

"Buyers who wish to purchase the book have to unconditionally agree to all the terms and conditions. This, as per the informant, amounts to exclusive agreement having an appreciable adverse effect on competition.

"It is urged that by slowly destroying players in physical market and creating product specific monopoly leading to manipulation of price, control of production and supply, imposing terms and conditions detrimental to interests of consumers, such agreements distort fair competition in the market place," the order said.

The complaint was filed late last year.

Reference: http://www.firstpost.com/business/cci-rejects-complaints-flipkart-snapdeal-e-retail-majors-2229590.html