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CCI investigating financial dealings between Amazon, Flipkart and their top sellers

Amazon and Flipkart have repeatedly denied any special agreements with specific sellers.

What is happening? The Competition Commission of India (CCI) is reviewing documents that suggest financial dealings between top e-commerce companies and their preferred sellers, Economic Times reported on May 31. This is part of the antitrust investigation into Amazon and Flipkart initiated by the competition watchdog in January 2020.

Why does this matter? India’s Foreign Direct Investment (FDI) regulations prevent e-commerce marketplaces from acting as sellers on their own platform, but online sellers and retailers bodies like the Confederation of All India Traders (CAIT), Swadeshi Jagaran Manch (SJM), and All India Online Vendors Association (AIOVA) have repeatedly alleged that Amazon and Flipkart provide preferential treatment to select sellers (such as Cloudtail and Appario for Amazon) in whom they have a financial interest, thus circumventing the FDI regulations. Both e-commerce platforms have denied these allegations so far.

More time sought: CCI was expected to complete the investigation by the first week of June, but in light of the new findings, the Director-General has reportedly sought additional time.

Documents obtained in the raid: CCI reportedly found information related to financial dealings in documents obtained from the raids conducted against top sellers on Amazon and Flipkart on April 28. These raids were a significant development in the investigation being reportedly the first instance of CCI conducting a raid in a non-cartel case.

What is CCI’s investigation about? CCI’s probe against Amazon and Flipkart aims to look at four alleged violations:

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  1. Exclusive launch of mobile phones
  2. Promoting preferred sellers on their websites
  3. Deep discounting practices
  4. Prioritising some seller listings over others

What else? The documents obtained also reveal the acquisition costs of the goods. This should enable CCI to investigate the deep discounts allegation, Economic Times said.

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