The Confederation of All India Traders (CAIT) has intensified its push for regulatory reform in India’s e-commerce sector, calling for the creation of a specialised, separate and active regulator dedicated to overseeing digital retail platforms.
In a letter to Finance Minister Nirmala Sitharaman, the traders’ body expressed concerns that the Competition Commission of India (CCI) has failed to effectively regulate the monopolistic practices of e-commerce giants Amazon and Flipkart. CAIT highlighted that without targeted oversight, India’s retail landscape could be irrevocably damaged, leaving small and medium traders unable to compete.
Manipulating the market
CAIT’s letter highlighted the damaging impact of Amazon and Flipkart’s practices on India’s retail sector. The e-commerce platforms are accused of offering deep discounts, made possible through their foreign direct investment (FDI), to undermine small traders. By selling products below cost, Amazon and Flipkart have driven independent sellers out of the market. This has allowed the two companies to establish near-monopolistic control over the online retail sector, with adverse consequences for consumers and competition.
The letter details how these e-commerce giants have exclusive tie-ups with mobile manufacturers, ensuring that popular devices are only available through their platforms. This not only harms local traders but also restricts consumer choice. CAIT claims that the predatory pricing strategies employed by Amazon and Flipkart have resulted in heavy losses for local retailers while enabling e-commerce companies to monopolize key product categories.
Allegations against CCI
According to the letter, despite numerous complaints lodged by CAIT and other trade associations, the CCI has been slow to act. Investigations into these practices, including a case filed in 2019, have dragged on for years without significant enforcement action. Even after CCI raids in 2022 uncovered evidence of predatory pricing and marketplace manipulation, CAIT contends that the regulator has failed to take decisive steps to curb these illegal activities.
The letter has criticized CCI for its “lackadaisical approach” in investigating Amazon and Flipkart for their alleged anti-competitive practices. CAIT accused the competition watchdog of dragging its feet despite mounting evidence against the e-commerce giants, allowing them to dominate India’s retail market at the expense of small and medium traders.
The letter also accuses CCI officials of complicity in stalling the investigation. According to CAIT, a senior official met with Flipkart’s CFO under questionable circumstances, suggesting undue influence on the investigation. The letter also revealed that key CCI officials had provided “assurances” to Amazon and Flipkart, stating that no significant action would be taken against them.