Flipkart faces probe for misuse of market dominance

BENGALURU: The National Company Law Appellate Tribunal (NCLAT) has directed the Competition Commission of India (CCI) to start investigating e-commerce firm Flipkart for alleged misuse of its dominant position in the market. The order is based on an appeal for a probe filed in 2018 by the All India Online Vendors’ Association (AIOVA), which represents a group of small e-sellers.

The competition regulator had earlier disposed of AIOVA’s appeal for a probe into Flipkart, which is owned by US retail major Walmart. But NCLAT set aside the CCI order and asked the director general to begin an investigation. The move comes at a time when CCI had begun a probe into Amazon India and Flipkart. The probe was launched in January this year based on a complaint by the Delhi Vyapar Mahasangh. But the Karnataka high court gave both Amazon and Flipkart a stay on CCI’s investigation last month after the two e-tailers, who control 70-80% of the market, filed an appeal.



“We are delighted with today’s order. We are positive after the e-commerce study findings that the CCI will penalise these platforms for violating various provisions of the Competition Act,” said Chanakya Basa, who represented AIOVA in this case.

“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 said. The allegations made against Flipkart include the sale of goods on a wholesale basis to select sellers, who in turn sell on Flipkart marketplace, and preferential treatment of small sellers. AIOVA made these allegations against two Flipkart entities — Flipkart India (the wholesale arm) and Flipkart Internet (the marketplace entity).

For CCI, while it initially did not find merit in AIOVA’s plea, the regulator recently conducted a study on the ecommerce sector which was followed by the launch of the probe earlier this year. Interestingly, Amazon India, prior to the latest developments, had referred to the CCI’s 2018 order disposing of the AIOVA plea several times in the Karnataka high court, when it argued for a stay order on the CCI probe on Amazon and Flipkart. But the HC stayed that CCI probe last month.

The complaints against both Flipkart and Amazon have been in the making for a while as small traders have been pleading the government over various practices in the last 18 months.