An antitrust investigation in India has revealed that U.S. e-commerce giants Amazon and Walmart’s Flipkart breached local competition regulations, Reuters news report said.
The Competition Commission of India (CCI) launched an inquiry in 2020 following allegations that both companies favored certain sellers on their platforms and prioritized their listings over others.
The findings, detailed in reports dated August 9, 2024, show that both Amazon and Flipkart created environments where preferred sellers appeared prominently in search results, marginalizing other vendors. The 1,027-page report on Amazon and the 1,696-page report on Flipkart both conclude that the companies’ practices significantly disadvantaged ordinary sellers.
“Each of the anti-competitive practices alleged … were investigated and found to be true,” the reports state. The CCI’s investigation has been spurred by complaints from the Delhi Vyapar Mahasangh, an affiliate of the Confederation of All India Traders (CAIT), which represents millions of small retailers.
The investigation’s outcome is a significant blow to Amazon and Flipkart, who face increasing scrutiny from smaller retailers who argue that their businesses have suffered due to the e-commerce giants’ aggressive pricing strategies and preferential treatment of select sellers.
In response, Amazon and Flipkart have yet to provide official comments, though both companies previously denied any wrongdoing, asserting their practices comply with Indian regulations. The companies now have the opportunity to review the reports and file objections before the CCI decides on potential fines.
The investigation follows earlier legal battles and a Reuters investigation from 2021, which exposed how Amazon allegedly used preferential treatment to sidestep Indian laws. The CCI’s findings also underscore concerns about “predatory pricing” and deep discounting practices by both companies, which the CCI claims have a “catastrophic impact” on market competition.
This latest development adds to ongoing legal challenges faced by Amazon in both India and the United States, where the Federal Trade Commission has also accused the company of using anti-competitive strategies to maintain its market dominance.
In response to the investigation, CAIT has announced plans to escalate the matter with the federal government. Meanwhile, the Indian e-retail market, valued at $57-60 billion in 2023 and projected to exceed $160 billion by 2028, continues to grow as Amazon and Flipkart remain key players.
Amazon, which recently pledged to increase its Indian investment to $26 billion by 2030 and target $20 billion in merchandise exports by 2025, faces a complex landscape of regulatory challenges and competitive pressures.
