Amazon Flipkart: ETtech Explainer: Timeline of CCI’s antitrust probe into Amazon and Flipkart

Ecommerce majors Flipkart and Amazon are in the throes of an antitrust investigation by the Competition Commission of India (CCI), for favouring select sellers on their platforms. The case, which began four years ago, comes ahead of the festive season which is most lucrative for these companies.

ETtech takes a look at its genesis and the timeline:

Timeline of the case

The case started in October 2019, when traders body Delhi Vyapar Mahasangh, an affiliate of the Confederation of All India Traders (CAIT), petitioned the CCI against Amazon and Flipkart, saying the platforms favour some sellers over others. The matter was then escalated to the federal government.

In January 2020, the CCI passed an order and called for an investigation into Amazon and Flipkart, asking the Director General to probe the issue. The ecommerce giants challenged the verdict in various lower courts, denying any wrongdoing and mounted legal challenges, even going up to the Supreme Court against the investigation. They said the antitrust body did not have enough evidence to pursue the matter.

In August 2021, a three-judge Supreme Court bench led by Chief Justice N V Ramana said companies like Amazon and Flipkart should volunteer for such investigations, and ordered the companies to face the antitrust probe.

The DG submitted its report to the CCI this August, and sent non-confidential reports to both Amazon and Flipkart sharing the concerns and alleged claims. The report found that smartphone makers including Xiaomi, Samsung, OnePlus, Realme and Motorola were exclusively launching their products on these platforms. The antitrust body also asked for financial statements of these companies for the past three fiscal years.

In September, the CCI ordered the ecommerce firms to share their financial statements for the investigation, to help determine the penalty for the companies after a court hearing.

According to the 2023 amendment to the competition law, the CCI may impose a fine of up to 10% of the average global turnover or income of three preceding financial years on each of the parties found to have breached the law. This may include revenue earned by the company in India and abroad.

Amazon and Flipkart have expressed concern over the circulation of sensitive information in the public domain.

What is the case?

• Investigations by the watchdog found the companies in violation of competition law by giving preference to a handful of sellers on their shopping websites whom they had business arrangements with, Reuters reported.
• The companies were also found to be giving priority to certain listings, and steeply discounting products, which is hurting other companies. The CCI went on to say that the companies had built an ecosystem “wherein no seller other than its preferred seller can survive.”
• The August 9-dated investigation report revealed that in this ecosystem preferred sellers are prioritised in search results, with the rest being relegated to just database entries. The report on Amazon was was 1,027 pages long, while that on Flipkart came to 1,696 pages.
• This also involved exclusive product launches and deep discounting for a few sellers, especially for major smartphone brands like Samsung, Xiaomi, Motorola, Realme and OnePlus.
• This becomes important as nearly 50% of smartphone sales in 2023 took place online, with Flipkart and Amazon having a 55% and 35% share, respectively, as per data from Datum Intelligence. Samsung and Xiaomi together command nearly 36% of the Indian smartphone market, Counterpoint Research has found.
• The investigation also claimed that both Amazon and Flipkart “deliberately downplayed” allegations of exclusive launches and deep discounting, even though officials said the practice was “rampant”.
• The CCI said the firms used foreign investments to offer discounted services like warehousing and marketing to select sellers.

What’s next?

The case gains significance ahead of the festive season about to kick off when both companies host their annual sale events with massive discounts on categories like electronics and home appliances.

ET reported on September 14 that the CCI will likely issue final orders by November on its four-year-long investigation.

The findings of the case are likely to impact the growing ecommerce industry, of which Amazon and Flipkart are key players. The ecommerce market is expected to reach over $160 billion by 2028, according to consultancy firm Bain. The involvement of high-tech brands in the case is likely to add to legal and compliance issues for the platforms.