Indian authorities have concluded that e-commerce giants Amazon and Walmart’s Flipkart breached local antitrust laws by favoring specific sellers on their platforms, according to reports obtained by Reuters. The investigation, led by the Competition Commission of India (CCI), found that both companies used their business relationships to give preferred sellers an advantage, leading to unfair competition.
In 2020, the CCI ordered a probe into the two companies based on allegations that they promoted certain sellers and prioritized their listings. The findings, detailed in a 1,027-page report on Amazon and a 1,696-page report on Flipkart, were compiled by investigators and dated August 9. The reports revealed that preferred sellers consistently ranked higher in search results, pushing out other sellers and distorting fair competition.
Both reports concluded that all alleged anti-competitive practices were verified, stating, “Ordinary sellers remained as mere database entries.” The documents, which have not yet been made public, mark the first time these findings are being reported by Reuters.
Neither Amazon, Flipkart, nor the CCI responded to requests for comment. However, both companies have denied any wrongdoing, maintaining that their business practices comply with Indian law. They now have the opportunity to review the reports and file objections before the CCI determines potential penalties.
The investigation stems from a complaint by the Delhi Vyapar Mahasangh, an affiliate of the Confederation of All India Traders (CAIT), which represents 80 million retailers across the country. CAIT has praised the investigation’s outcome and announced plans to escalate the issue with the Indian government.
The findings present another challenge for Amazon and Flipkart, which have long faced criticism from smaller retailers in India. These businesses argue that deep discounts offered by the two e-commerce platforms have caused significant harm to their operations. The Indian e-commerce market is estimated to be worth between $57 billion and $60 billion in 2023, with expectations to reach $160 billion by 2028, according to consultancy Bain.
This investigation also follows a 2021 Reuters report that uncovered Amazon’s preferential treatment toward a select group of sellers, which helped the CCI corroborate its evidence against the company. Indian investigators had raided certain Amazon and Flipkart sellers as part of the probe. The CCI report highlighted how preferred sellers benefited from boosted search result rankings, with deep discounts on mobile phones and other goods, a practice it labeled as “predatory pricing.” This has created a “catastrophic impact on the existing competition,” especially in the mobile phone market, but the reports noted the issue extended to other categories as well.
Both companies had tried to block the CCI investigation through legal challenges, but the Supreme Court of India allowed it to proceed in 2021. Despite this, Amazon continues to expand its operations in the country, with plans to invest $26 billion in India by 2030 and aims for $20 billion in merchandise exports by 2025.
In the U.S., Amazon faces similar scrutiny as the Federal Trade Commission has filed a lawsuit accusing the company of using anti-competitive tactics to maintain monopoly power. Amazon has criticized the lawsuit, claiming it would lead to higher prices and slower delivery times, ultimately harming consumers.
Featured Image courtesy of Telegraph India
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