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CCI warns e-commerce sites of investigation into exclusive sale tie-ups, ranking of products

Gupta said that if e-commerce players do not address the adverse impact of online practices on market competition voluntarily, then it will warrant an investigation

twitter-logo BusinessToday.In   New Delhi     Last Updated: January 11, 2020  | 15:16 IST
CCI warns e-commerce sites of investigation into exclusive sale tie-ups, ranking of products
CCI has asked e-comm firms to voluntarily address the issues

India's competition watchdog, Competition Commission of India on Saturday warned dominant e-commerce platforms of investigations if they do not refrain from "opaque practices". CCI chairman Ashok Kumar Gupta said that certain practices such as how products and services are ranked in response to customer searches and exclusive tie-ups were already mentioned in a report earlier this week.

Exclusive sales tie-ups of products such as new models of mobile phones available only online are major causes of concern. Gupta said that if e-commerce players do not address the adverse impact of online practices on market competition voluntarily, then it will warrant an investigation, as mentioned in a report in Livemint.

Gupta who was speaking at a conference on competition law organised by the PHD Chamber of Commerce and Industry said that the CCI's observations are not mere observations that can be ignored without consequence. "But we have to give time to the industry to put their house in order. For each and every concern, we have given our observation (in the report). Those can get converted to a case. Enforcement can be done on a case to case basis. We are nudging them. If tomorrow, this issue is agitated by some player before the Commission, then it altogether becomes an issue in terms of enforcement," said Gupta.

Gupta said that online sales constitute 40-45% of phones sold. A trade body of retailers has already filed a petition before the commission over the impact of online sales on the markets of these products.

The CCI had released a report titled 'Market Study on e-commerce in India' earlier this week. The report said that the CCI could not identify sources of cost savings that could fully explain the deep discounts. "Discounts benefit consumers in the form of lower prices, and can help platforms create network. However, if the same is not a reflection of efficiency gains or cost savings and at the same time it creates distortionary effects on the supply side of the markets, the central question that arises is whether price competition of this form can be seen as competition on the merits," it said.

Also read: India's competition watchdog calls for more transparency on discounts by e-commerce platforms

Also read: Reliance announces entry into online grocery business with JioMart; to take on Amazon, Flipkart

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