Smart wearables maker GOQii Technologies has sent a cease-and-desist notice to Flipkart, accusing the e-commerce platform of violating terms of agreement by selling its fitness trackers at huge discounts without approval. MediaNama has seen a copy of the notice. GOQii, which is backed by Ratan Tata, says Flipkart’s “70% to 80% discounts” on its products constituted predatory pricing and was an anti-competitive practice under the Competition Act 2002. It says Flipkart’s practices also violated the government’s new FDI rules for e-commerce, which say that an online marketplace cannot influence prices directly or indirectly and must offer a level playing field to all vendors. GOQii’s notice says the company would initial legal proceedings if Flipkart did not cease its activities within 24 hours of receiving it. The notice calls on Flipkart to immediately:
- Stop selling GOQii products at unapproved discounted prices
- Give GOQii an unconditional undertaking in writing that it will do so
- Provide an account of the number of units it has already sold, and at what prices
- Undertake that GOQii’s products will henceforth be sold only at mutually agreed MRP prices
The products in question are the Vital and Pulse, which are fitness bands, and Stride, a tracker that people attach to their shoes. Flipkart appears to have taken action. As of noon on May 20, 2019, Vital is available on the platform for Rs 2,999 – a discount of just 14% – and the Pulse is not available. While Stride is available at a 66% discount, GOQii’s notice only mentions the lowest price drops the two firms agreed on for the Vital and Pulse (see below).
What the cease-and desist notice says
GOQii’s legal notice says it has had a supply agreement with Flipkart since May 31, 2016; this agreement was amended twice – in November 2016 and September 2018. On September 11, 2018, the companies agreed on the MRP and lowest price drop, among other things, for the Vital and Pulse fitness bans. According to GOQii, they agreed that Vital, with an MRP of Rs 3,499, would be sold for no less than Rs 1,999 (43% discount); and Pulse, which retails for Rs 1,999, would not be sold for less than Rs 1,499 (25% discount).
Around the first week of this month, GOQii says, it noticed that Flipkart was selling the products at heavily discounted prices. It said that the terms agreed by the two companies required Flipkart to seek its approval before doing do. “We place reliance on Clause 5 of said Supply Agreement which makes it clear that no modification to margin/price terms will be allowed except by way of email. Since, Flipkart has not obtained such approval by way of emails, [it] has violated the terms and conditions of the said agreements,” the notice states.
Anti-competitive practices by platforms alleged before
Flipkart and Amazon have long been accused of anti-competitive practices. Last May, the All India Online Vendors Association – which represents about 3,500 sellers on Flipkart, Amazon and Snapdeal – had filed a petition with the Competition Commission of India (CCI) against Flipkart, accusing it of abusing its dominant position. AIOVA said that Flipkart India would acquire goods from various parties and immediately sell them to retail sellers at huge discounts. The retailers would then sell these goods at unmatched prices on Flipkart.com. It said that this kind of “preferential treatment and discriminatory conduct”, was prohibited under the Competition Act and also alleged that Flipkart was “killing many independent sellers who depend on its platform for their livelihood”.