Wednesday 8 January 2020

Competition Commission of India pitches for self-regulation of ecomm platforms

Competition Commission of India pitches for self-regulation of ecomm platformsNEW DELHI: India’s competition watchdog has called for clear policies on deep discounts and transparency in seller ratings by large ecommerce companies, in what could have significant implications for etailers such as Amazon and Flipkart.

The Competition Commission of India (CCI) on Wednesday unveiled a set of self-regulation guidelines for the ecommerce sector, along with the findings of an ecommerce market study it initiated in April last year. “Bring out clear and transparent policies on discounts, including inter alia (among other things) the basis of discount rates funded by platforms for different products/suppliers and the implications of participation/non-participation in discount schemes,” the report titled “Market Study on ecommerce in India: Key Findings and Observations” said.

The CCI has said ecommerce players should increase transparency in search rankings, collection and use of data and user review and rating mechanisms. The commission has suggested that ecommerce firms notify businesses on their platforms of any proposed changes in terms and conditions and only bring them into effect after a reasonable notice period.

Flipkart and Amazon did not respond to requests for comment as of press time on Wednesday.

The Confederation of All India Traders (CAIT) had approached the Commission in 2019 to discuss “unethical commercial practices” of ecommerce platforms such as Amazon and Flipkart. CAIT had also alleged that the two ecommerce players have violated FDI policy by indulging in predatory pricing.

The study noted that “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.”

Competition Commission of India pitches for self-regulation of ecomm platforms
The CCI had noted concerns that ecommerce platforms gave preferential treatment to some sellers including higher search rankings, as well as about “arbitrary increases in commissions” charged by ecommerce players.

Restaurants associations including the National Restaurant Association of India had protested alleged deep discounting by online food ordering platforms such as Swiggy and Zomato as well as unilateral hikes in commissions.

The CCI has also recommended that platforms describe the key parameters of search rankings and clearly state if payments by listed businesses on the platform could influence rankings. The report also recommended that platforms share information with sellers on user reviews and only publish reviews by verified buyers.

Praveen Khandelwal, secretary general of CAIT, said, “The government should take necessary action to stop the malpractices by ecommerce platforms. The recommendations of the CCI must be seriously implemented in the shape of a legal document.

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