India’s Competition Commission (CCI) has determined that U.S. e-commerce giants Amazon and Walmart’s Flipkart breached local competition laws by favoring select sellers on their platforms. This finding follows a two-year investigation into allegations that both companies provided preferential treatment to certain sellers, skewing the online marketplace in their favor.
The investigation, ordered by the CCI in 2020, aimed to scrutinize claims that Amazon and Flipkart were promoting sellers with whom they had business arrangements, thereby prioritizing their listings over those of other vendors. The CCI’s comprehensive reports, dated August 9, reveal that the companies’ practices led to favored sellers appearing more prominently in search results, effectively sidelining other competitors.
According to the 1,027-page report on Amazon and the 1,696-page report on Flipkart, the anti-competitive practices investigated were confirmed to be true. Both reports conclude that ordinary sellers were relegated to “mere database entries,” with preferred sellers benefiting from enhanced visibility and additional advantages.
The CCI’s findings are significant as they represent a major setback for Amazon and Flipkart in India, a key market for their e-commerce operations. The companies have not yet responded to requests for comment, but they have previously denied any wrongdoing, asserting that their practices comply with Indian laws.
The investigation was prompted by a complaint from the Delhi Vyapar Mahasangh, an affiliate of the Confederation of All India Traders (CAIT), which represents a vast network of retailers. CAIT has welcomed the CCI’s findings and indicated it will escalate the matter with the federal government.
Amazon and Flipkart are leading players in India’s rapidly growing e-retail market, valued between $57 billion and $60 billion in 2023, and projected to surpass $160 billion by 2028. The companies face ongoing criticism from smaller retailers who argue that deep discounts and preferential listings harm their businesses.
The CCI’s reports highlight that the preferential treatment extended to certain sellers resulted in “catastrophic” impacts on market competition, particularly through practices such as predatory pricing on mobile phones. These findings are expected to prompt further scrutiny and potential penalties. The companies have faced legal challenges in an attempt to block the investigation, but the Supreme Court allowed it to proceed in 2021.
