CCI Dismisses Allegations of Abuse of Dominance against Flipkart India

On November 6, 2018, CCI dismissed information alleging abuse of dominance under Section 4 of the Act by All India Online Vendors Association (‘AIOVA’) against Flipkart India Private Limited (‘Flipkart’) and Flipkart Internet Private Limited (‘Flipkart Internet’), collectively referred to as ‘Flipkart entities’.[1]

It was argued that Flipkart sells goods to WS Retail Services Private Limited (‘WS Retail’) which was owned by Flipkart Internet (till 2012) at a discounted price and these goods are then sold on Flipkart Internet’s platform i.e., Flipkart.com. This was alleged to amount to preferential treatment to certain sellers. Further, it was alleged that Flipkart Internet is using its dominance in the relevant market to enter into another market of manufacturing products by providing discounts under private labels.

In order to analyze the conduct under Section 4 of the Act, CCI defined the relevant market as ‘services provided by online marketplace platforms for selling goods in India’. CCI observed that there are multiple players in the online marketplace platforms and though the size and resources of Flipkart are large, no one player is commanding a dominant position in the relevant market at this stage of the evolution of the market. Considering that the Flipkart entities are not dominant in the relevant market, abuse of dominance does not arise. However, CCI did note the submissions made by the Flipkart entities on merits, namely:

(i)      there is no abusive conduct by Flipkart or its entities since their B2B arrangements are neither exclusive nor do they impose any restraints on any reseller choosing to sell its product through Flipkart’s platform;

(ii)    structural link with WS Retail, as admitted in the information, existed only till 2012 and  WS Retail is no longer a seller on Flipkart’s marketplace;

(iii)    as regards abusive conduct by Flipkart Internet, the terms and conditions on which sellers access the marketplace are standard; and

(iv)     the marketplace is bound and compliant by the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017.

CCI held that no case of contravention of the provisions of Section 4 of the Act is made out against the Flipkart entities. The decision also notes that CCI came to this conclusion after holding preliminary conferences with Amazon Seller Services Private Limited (being a key player in the relevant market) while noting that intervention in the relatively nascent and evolving model of retail distribution in India needs to be carefully crafted, lest it stifles innovation.

[1] Case No. 20 of 2018.

Published In:Inter Alia Special Edition Competition Law November 2018 [ English
Date: November 30, 2018