The Competition Commission of India on September 11 dismissed a case of alleged abuse of dominance by Amazon filed by the parent of apparel company Beverly Hills and Polo Club (BHPC). The complaint had alleged that Amazon engages in deep discounting, preferential seller treatment, and allows the sale of counterfeit goods on its platform, all of which have hindered Beverly Hills and Polo Club’s entry into the “online fashion retail” market in India.
The competition watchdog noted that there were a number of players in the market defined in the complaint apart from Amazon, including Flipkart, Myntra, and Ajio among others. While relying on a 2019 report by analytics firm Redseer, CCI said that in the online fashion segment, Amazon and Flipkart have a market share of around 35%. “It does not appear that any one platform is occupying a dominant position in the relevant market,” CCI said in the order.
BHPC’s allegations against Amazon
BHPC said that there were a number of instances of unfair and anti-competitive practices by Amazon and its affiliates, which caused an “exclusionary effect” on BHPC’s overall online business operations in India. It said that due to its “deep pockets” Amazon is able to incur capital expenditure running into thousands of crores, which depicts its dominance. Some other allegations made by BHPC in the complaint:
Counterfeit products: Beverly Hills and Polo Club said that it doesn’t sell any of its apparels on Amazon’s website, and those can be bought online only from its own website. Despite this, the complaint alleged that, fake products with the BHPC branding continue to be available on Amazon’s platform, often at “unfair and discriminatory” prices.
- CCI’s response: The regulator said that the sale of counterfeits on e-commerce platforms “could be a matter of concern for brands and consumers alike”, however, “the issue does not lend itself to antitrust scrutiny”. The Commission held that besides antitrust law, the issue of sale of counterfeits on online platforms can be better addressed by dedicated regulation.
Harm to reputation: Since Beverly Hills and Polo Club branded counterfeit products were awash on Amazon, per the complaint, it “not only caused confusion due to visibility of excessive discounting of products under the BHPC brand”, but also caused “immense reputational harm to Beverly Hills and Polo Club, as it resulted in the delivery of “inferior counterfeit/unlicensed/unauthorised products”.
Benefit to competitors: The alleged availability of counterfeit and low quality apparels branded as BHPC products on Amazon, has reduced its bran appeal, directly benefitting BHPC’s competitors such as US Polo Association, which sells its products on Amazon.
Preferential treatment: The complaint alleged that Amazon doesn’t act as a “neutral marketplace”, and in fact, favours its own preferred sellers or private labels by giving them a higher search ranking and positive customer reviews. It also alleged that how these search rankings work is opaque. BHPC said that ‘Symbol’ which is Amazon’s own private label “is shown to have higher ranking and better customer reviews than the other brands” on Amazon. It also said that Cloudtail and other Amazon affiliates are ranked higher in sellers’ listings
Access to sellers’ data: Amazon has been accused of having access to seller data, to gain insight on better performing products on its platform to launch competing products at much cheaper prices, in several antitrust complaints around the world. BHPC also levelled similar allegations against the company. Allen Solly, another competitor of Beverly Hills and Polo Club allegedly sells its apparels through Cloudtail “as non-preferred sellers cannot offer deep discounts and other host benefits associated with the preferred seller”, per the complaint.
Amazon and antitrust activity
In August, the All India Online Vendors Association (AIOVA), a trade union representing online sellers, filed an antitrust suit against Amazon India, alleging preferential treatment to some sellers, and predatory pricing. The body alleged that Amazon India buys goods in bulk from manufacturers and then sells them at a loss to sellers such as Cloudtail, who then offer the same goods on Amazon.in at heavily discounted prices.
In January, CCI had ordered a probe into alleged competition law violations by Amazon and Flipkart. The CCI had initiated the probe following a complaint filed by the Delhi Vyapar Mahasangh (DVM), a group of MSME (Micro, Small and Medium Enterprises) smartphone traders. DVM had accused that Amazon has certain agreements with sellers (that are allegedly controlled by the company) and that it gives these sellers unfair preferential treatment over others. Following CCI’s investigation, Amazon approached the Karnataka High Court, seeking a stay on the probe, and the court gave it interim relief.
Amazon is also facing antitrust probes in Canada and Germany. Senators in the US also grilled the company’s founder Jeff Bezos, during a Congressional antitrust hearing, over its treatment of third-party seller data, among many other things.