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IAMAI welcomes CCI’s order to close investigation against e-commerce companies

The Internet and Mobile Association of India [IAMAI] has welcomed
the Competition Commission of India’s (CCI) decision to quash charges of
cartelization and anti-competition practices by e-commerce companies, including
Flipkart, Snapdeal, among others.

The Internet and Mobile Association of India [IAMAI] has welcomed
the Competition Commission of India’s (CCI) decision to quash charges of
cartelization and anti-competition practices by e-commerce companies, including
Flipkart, Snapdeal, among others.

IAMAI said that it hopes that this will finally put a stop to motivated
charges brought up regularly by certain interested groups against e-commerce companies.
IAMAI is of the view that this order will allow e-commerce companies to
continue to provide innovative services to consumers in a free and fair manner.

In recent months, charges have been brought by various malcontent
elements that discount sales launched by various e-commerce websites were
anti-competitive in nature. It was also alleged that e-commerce websites and online
product sellers entered into exclusive agreements, thereby leading to market
dominance.

The CCI has ruled that e-commerce companies did not violate
competition norms by indulging in cartelization or by abusing their dominant
position. “… the Commission is of the
prima facie view that no case of contravention of the provisions of either
section 3 or section 4 of the Act is made out against the opposite parties,”
it said in its order.

With regard to exclusive agreements, the CCI said that such pacts
need not result in appreciable adverse effect on competition. “It does not seem that such arrangements
create any entry barrier for new entrants. It seems very unlikely that an
exclusive arrangement between a manufacturer and an e-portal will create any
entry barrier as most of the products which are illustrated in the information
to be sold through exclusive e-partners face competitive constraints,” the
order stated.

In fact, the CCI order praises the e-commerce companies by observing
that online distribution channel provide an opportunity to the consumers to
compare the prices as well as the pros and cons of the product. Furthermore,
through the option of delivery right at their door steps, consumers have the
opportunity to accept the purchase at their convenience and do not need to set
aside a couple of hours at a stretch to make the purchase through a
brick-and-mortar retail outlet. Therefore, at this stage, it does not appear
that the exclusive arrangement between manufacturers and e-commerce/portal
companies lead to Appreciable adverse effect on competition (AAEC) in the
market.

It
was alleged that e-commerce websites and product sellers entered into exclusive
agreements to sell products exclusively on select portals. After receiving
several complaints last year, CCI was probing the case of unfair business
practices against Flipkart, Mynta, Amazon, Jabong, Snapdeal and other online
retailers. 

The CCI said
that in case of smartphones the relevant market should be the market for
smartphones, not a specific model of smartphone of a specific company such as
Redmi 1S and Mi 3 variants of Xiaomi Mobile.

In recent
months, there have been rising concerns that discount sales launched by various
e-commerce websites, including Flipkart were anti-competitive in nature.

In their
submission made to the CCI, online retailers said that there was enough
competition in the retail market and even in the e-portal market and their
respective shares were scattered to cause any disruption in the said market. 

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