Reports from regulatory authorities have revealed that smartphone companies like Samsung, Xiaomi, and others collaborated with Amazon and Walmart's Flipkart to exclusively launch products on the e-commerce platforms in India, which violates antitrust laws. Investigations by the Competition Commission of India (CCI) found that Amazon and Flipkart breached local competition laws by favouring select sellers, prioritising certain listings, and heavily discounting products, thereby causing harm to other companies.
What CCI report say?
The CCI's reports implicated the Indian units of Samsung, Xiaomi, Motorola, Realme, and OnePlus in the practice of exclusive phone launches in collusion with Amazon and its affiliates, which is a violation of competition law. Similarly, the Indian units of Samsung, Xiaomi, Motorola, Vivo, Lenovo, and Realme were found to be involved in similar practices in the case of Flipkart.
The involvement of smartphone giants like Samsung and Xiaomi in this case may lead to legal and compliance issues for them. The reports emphasise that exclusivity in business is not only detrimental to fair competition but also against the interests of consumers.
According to the reports, Amazon and Flipkart deliberately downplayed allegations of exclusive launches during the investigations, but the practice was found to be widespread.
What will happen next?
This investigation is a significant setback for Amazon and Flipkart in a crucial growth market, particularly due to their ongoing conflicts with small retailers for impacting their offline businesses.
The reports also mentioned that both companies used their foreign investments to offer subsidised rates for services like warehousing and marketing to a select group of sellers.
The investigation originated from a complaint filed by an affiliate of the Confederation of All India Traders, the country's largest retailer association. The CCI will review objections to its findings from Amazon, Flipkart, the retailer association, and the smartphone companies in the coming weeks and could potentially impose fines and mandate changes to their business practices.
What is the issue?
Retailers in India have long accused Amazon, Flipkart, and smartphone companies of exclusive phone launches online, stating that traditional retailers suffered because they didn't have access to the latest models.
According to the reports, exclusive launches not only adversely affected ordinary sellers on the platform but also brick-and-mortar retailers. Online phone sales have seen a significant increase, with Flipkart and Amazon holding the majority share in the market.
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Inputs from Reuters
