New Delhi: A Rs 2,199 watch available for Rs 247. An air purifier worth Rs 32,995 for Rs 23,999. Branded shoes at 60-80 per cent off, and an inverter worth Rs 9,995 at Rs 4,499. The Diwali sales offered by e-commerce giants Amazon and Flipkart draw thousands of breathless customers looking to score sweet deals on a whole range of essentials as well as indulgences.
The same deals have now brought the companies under the government’s scanner over alleged “predatory pricing”, a controversial business practice where a player offers massive discounts to mitigate competition.
Last week, Union Commerce Minister Piyush Goyal assured action against Amazon and Flipkart if the two companies are found guilty of the practice. The two companies have reportedly notched up sales of over $3 billion in their festive sales this month.
According to reports, the government has sent detailed questionnaires to both e-commerce platforms, which are owned by Americans.
“E-commerce companies have no right to offer discounts or adopt predatory prices. Selling products cheaper and resulting the retail sector to incur losses is not allowed,” Goyal was quoted as saying.
While the government awaits their response, ThePrint explains the laws the websites may have flouted with the discounts.
Also Read: Fashion, lifestyle and electronic items expected to vanish from Amazon & Flipkart
What is predatory pricing?
While Amazon is a US-based company, Flipkart, founded by Indians, is majority-owned by American giant Walmart.
Both follow the marketplace model of e-commerce, which means they connect sellers and buyers instead of selling their own wares. This is the only type of e-commerce where foreign investment is allowed in India.
Under FDI rules that kicked in this February, they are also barred from striking contracts with private companies for exclusive sales of certain items, for example, the OnePlus-Amazon partnership, and offering discounts.
Even so, Flipkart and Amazon, apart from other e-commerce portals, have often been accused of indulging in predatory pricing owing to the deep discounts they offer.
Before the new FDI rules took effect, these platforms were accused of buying products in bulk from manufacturers at heavy discounts, and then selling them at lower costs to entities where they had a stake. These entities would then reportedly sell these products on the e-commerce platforms at lower costs.
Costs were allegedly brought down further by waiving the delivery fee and via cashbacks, often on their own payment portals like Amazon Pay.
Since such practices are seen as inimical to the functioning of brick-and-mortar stores, the new FDI guidelines barred e-commerce entities from “directly or indirectly” influencing the price of goods and services.
It also tasked the companies with ensuring a “level-playing field”. In order to emphasise this, it stated that cashback or other services such as quick delivery should be applicable to all vendors on these platforms.
The policy required e-commerce platforms to realign their business structures to ensure compliance. A draft analysis by PwC, in fact, predicted that the revised policy could cause a $46 billion fall in online sales by 2022.
However, experts have been of the opinion that price-influencing is a competition issue rather than an FDI issue.
“FDI is the wrong place to regulate marketplace or anti-competitive behaviour,” Nikhil Narendran, a partner at India-based law firm Trilegal was quoted as saying. “Deep discounts by itself are not bad as long as they are not harmful for the consumer. Free market, competition, and innovation benefit the consumer.”
What about the Competition Commission of India?
Before the new FDI policy took effect, the Competition Commission of India (CCI) — the watchdog for anti-competitive practices in India — had absolved e-commerce platforms of indulging in anti-competitive practices.
For instance, in Ashish Ahuja v Snapdeal.com, the CCI noted that the e-commerce market “thrives on special discounts and deals”.
It had then ruled that while Section 4 of the Competition Act 2002 does prohibit predatory pricing, the discounts offered would not be illegal since Snapdeal was not a “dominant player” in the relevant market.
A market player is said to enjoy a dominant position when it can function independent of its competitors, customers and others, to take unilateral decisions.
However, with the growing concern over predatory pricing, the CCI is planning to issue a “soft policy advisory” for the e-commerce industry.
The commission has also initiated a study on e-commerce to gather information and insights from market participants in goods and services for various sectors like mobile phones, grocery, food, electronic/electrical appliances, lifestyle and hotels.
CCI chairperson Ashok Kumar Gupta told The Economic Times last month that deep discounts make a business “unviable” as it reduces the value of products and services in the eyes of the consumer.
Following written complaints by the brick-and-mortar retailers lobby, the Confederation of All India Traders (CAIT), the CCI also told Goyal that it will keep a close watch on these deep discounts.
Draft e-commerce policy
The Department for Promotion of Industry and Internal Trade also released a draft e-commerce policy in February, but this focused on setting up a legal and technological framework for restrictions on cross-border data flow.
The policy did propose prohibiting e-commerce marketplaces from adopting business strategies that favour one or few sellers/traders, and a more comprehensive version is expected in 2020. However, the government has clarified that there will be no changes in the FDI rules in the sector.
In August this year, the Ministry of Consumer Affairs, Food & Public Distribution released ‘E-Commerce Guidelines for Consumer Protection 2019’ to protect the rights of online customers. These guidelines make it the e-commerce platform’s responsibility to maintain a “level playing field” and to ensure that it does not “influence the price of the goods or services”.
Meanwhile, the US government has reportedly voiced its concerns over the new FDI rules for e-commerce, and pushed for the regulation to become a bilateral issue.
Also Read: RSS affiliate, trade body want govt to act against Amazon & Flipkart, fear ‘black Diwali’
This govt is trying to fool us, when jio was launched and they were giving free calls and internet services ,then where was their bullshit predatory pricing . You can’t fool us anymore. We know very well what are your intensions.
People say that these guys are taking all Indian money out to US. Without realizing that Amazon & Flipkart could not take 100% to US as the majority share of a transaction goes to the retailer selling the product .. Amazon/Flipkart only make small commission..
Once check the retialers property how they are looting citizens, for Rs500 product they charging Rs 1500, example puma basic shoe even brand factory selling rs 2000 which we can get it Rs 999 in online web.
At the outset, because of ecommerce companies, shopkeepers in remote villages and towns are able to sell their products to the customers in the metro cities
Obviously, such retailer would be happy to celebrate his diwali with such sales
On the contrary, the retailers (in the large metro cities) were looting the citizens with their predatory exorbitant prices. Further, these retailers also used to run parallel economy by encouraging cash transactions, under reporting their income, not paying taxes. Now karma has come sharply to return them their misdeeds
An open economy is always welcome. Thanking Amazon and Flipkart to connect the remote retailers in the remote villages to the customers in cities
The government should encourage the free market and open economy
Also, if government policy favours any specific industrial group or family, it should be avoided
You’re not allowed to kill competition unless you’re gujju.
The hypocrisy of Government of Amit Shah (I) Pvt. Ltd. stinks to high heaven.
This is so much bullshit.. What is ambani doing by giving free calls and cheaper rates he is also eating into bsnl profits. Modi government just wants to clear path for Mr. Ambani
Amazon and Flipkart don’t seem to be giving ministers’ share..They probably don’t know about ‘Hafta’ system in India….
This is the only platform which remains
Which is helping 100 percent for poor and below poverty line people to buy thing for cheaper
Hats off to our government, good work please continue ur good works by this kind of issues because in India only money speaks ( companies like reliance) not the people who put t vote
Nothing is stable …….. no body can cheat no one for ever…… -I AM AN INDIAN.
The government is always running after businesses where it is not able to earn more taxes directly. Lesser prices means lesser taxes for the looting government. God knows where the all money is going when they are demanding more money from RBI. Common men are delighted to shop online but no this government shall not accept even that. The retailers themselves are always trying to loot the customers by quoting outrageous prices for their goods and then trying to under report their earning through cash transactions. This whole system is flawed and needs a dictator. Only way for india going forward is dictator.
Modi government is just trying to make way for the Mukesh Ambani to enter online e-commerce business (as he stated earlier this year).
I was surprised lately how the regulatory authorities allow the manufacturers to mark MRP for more than double the supposed MRP of any product which some traders sell at MRP mentioned on the product, and some sell at different prices at their discretion. This is not only applicable for online trading but also for trading by dealers/traders.
Hence the Government should first of all try to control over the markup MRP prices mentioned on the Products and not allow to keep such wider margins.
Had it been Ambani… they would have found it perfectly alright.. They didn’t have the guts to question they same for jio even after the competitors filed so many complains and objections.
Now a days, due to fierce competition, every customer is wise enough to spend right amount for purchasing any item of his or her interest. The customer has really become a bargain master. This is nothing new for an Indian Customer. We have seen foreigners learning and adapting the skills of Indian bargaining style when they are buying from roadside shops. Every customer longs for the lowest price and time will come when the seller will discuss directly with prospective buyers about the price before launching his products in the market to avoid any confusion. In our country, it has become very advantageous for genuine buyers to fetch really competitive prices for the products ranging from a small item of grocery to a built up flat or house. Credit goes to the customers trained for excellent bargaining.
So why no question raised to reliance jio when it was selling it’s product free free free which impacts a lot to the other operator and with out Any option they had to switch off their Network.
The government is by all means following the cunning spirit conveyed by the adage: ” Show me the man, and I will show you the rule”.
Amazon, Flipkart are not as helpful as Mr Mukesh Ambani … That’s why suddenly predatory pricing is remembered!!
We don’t want BJP by ambani adani
At the outset, because of ecommerce companies, shopkeepers in remote villages and towns are able to sell their products to the customers in the metro cities
Obviously, such retailer would be happy to celebrate his diwali with such sales
On the contrary, the retailers (in the large metro cities) were looting the citizens with their predatory exorbitant prices. Further, these retailers also used to run parallel economy by encouraging cash transactions, under reporting their income, not paying taxes. Now karma has come sharply to return them their misdeeds
An open economy is always welcome. Thanking Amazon and Flipkart to connect the remote retailers in the remote villages to the customers in cities
The government should encourage the free market and open economy
Also, if government policy favours any specific industrial group or family, it should be avoided
Discounts by e-commerce retailers are good as long as they allow level playing field for conventional ‘brick and mortar’ retailers. Predatory pricing must be curtailed to save thousands of jobs in the retail market
What they want to do is a mystery
Everytime consumer or the common citizens gets benefited by something and has a chance to save some money this government is like ‘we need to stop this because Indians are meant to be poor’ and when the economy falls then they blame the citizen
Wow
If the democratic Govt of India is by the people, for the people of India, then it should not come against interests of people who get benefitted from e-commerce apps and sites. Even Govt benefits from FDI regime.
$44bn loss to govt extended as benefits to people as discount/cashback should be celebrated & taken positively.
Govt & tax system failed to provide to people what Amazon, Flipkart etc provided. So,Facilitate & develop partnership instead of opposing & blocking any good deeds done.
All know,due to such narrow minded greedy outlook of Finance Minister,RBI governor,even house loan interest rates for settlement in India remain 8-11% which is higher than other nations like Japan etc… This is a point of failure of govt in itself.They need to learn from their past how to improve,not to worsen life in India.
If the so called companies offer the items at discounted price it is good for the common man, and instead of crucifing these companies, the government should learn how they offer at low prices and still make profit. This means the original rate of a particular item which is being purchased from open market is priced too high, and the common man is being squeezed up and made to pay higher amount even if it can be sold at a very low price.
What happened to modi when ambani gave free internet and collapsed the Indian telcom market eventually in the breaking down of BSNL
No one is doing business to serve you but only to make profits 2day or 2mrw. This goes for ecommerce also.
In India a considerable population survives by indulging in retailing through a multi level retailing chain. Where the profit margin is shared/distributed between them. The costs of brick & mortar stores also adds to lot of costs depending on its location.
The retailers cut down storage considerably by locating their stores accordingly which is not the option with the general retailer. 2ndly the bulk purchasing capacity which he has is not available to the general retailer.
Its something like the big fish is being encouraged to eat the small fishes. This will lead to employment crisis, and economic slavery of Indian nation to such MNCs if not checked and regulated in time.
Don’t forget 2day u may be a beneficiary, 2mrw you will be the sufferer. Dontbforget the historical lesson we have already seen in hands of East India Company.
Yes I also support better monitoring and regulation of the general retailers also to ensure fair practices in their businesses. GST is one measure. Similar measures on QC & Price labelling is also required………
Seller and buyer should decide the price not the government. Unless the product is a fundamental necessity .
Government should also be concerned when the airlines do the opposite.There are many airlines, including Air India,who cheat the public by increasing their ticket prices many times . There should also be a cap on airlines ticket prices which should be worked out logically.
The present govt of India has failed to provide any relief to the citizens. The inflation rate is so high. Shopkeepers often never give discounts to people and many times also sell goods of very poor quality for big prices. So when online companies are giving discounts then the common consumer is being benefited from this. So when these companies are cutting their own margin and giving discounts to people then what is the problem. So these online companies must be allowed to do their business and give huge discounts to the people. Let the people enjoy shopping at low prices.
Ease of doing business in India?
Why the modi goverment not oppose and cii not shows their role when mukesh ambani led jio offered free service for one year and after may complaints on court take action against the government for this pricing. Exchequer loss thousands of crores due to this pricing. Now a new terror is lavied by jio know to. 6 pisa iuc charges which are not the part of any criteria of rules but goverment favour and no action is being taken and cci is sleeping and trai is the executive of ambani
Dusribaar Kandhe pe kya bitha diya , ye toh kaan mein muthne laga .
Bhai ye amazon flipkart aur baki sab, unhone hi toh india ki economy ko barawha diya ,
ghar ghar wo saman pauhchaya jiska liye dukandar chik chik karte the
Wo bhi discounted price pe
Packing ka paisa , gari ka paisa , jo 4 th floor tak tv ya ac charaheiga usko alag se paisa do
Aur lakh o laundo ko naukri diya ,
Aur jo local dukandaar purana maal naye price tag mein bech dete hein uska?
ab bhajpa ki khujli badh rhi hai Kyunki diwali mein khusiyan ke badle mein mitron tax bharo
Modi ko sab PM quota se free milta hai. Aam aadmi ko online par sasta kharade do
BJP Government should recall their promises made for the people , goods prices where every citizen can afford.
Instead of targeting the worlds biggest e commerce company target those local market sellers who suck up the money beyond MRP rate. Other countries like US and Canadian local markets sellers are far better who sell things affordable to their every type of citizens. Literally in cents with quality.
I got quick dry shots in reliance market for Rs500,and same kind of quick dry shots I purchased on road side for Rs180 in goa written inside made in Bangladesh, both clothes type are same what does it mean
Oh Boy! Now selling something with justified price seems predatory prices. Damn Shit! Ban those blood suckers who sell things blindly in the local market with prices that is way too high than the MRP! Common government grow up a little!
Everybody should understand that big grocery retailers and online grocery stores of today are really doing a good job by benefitting their customers by selling various items after lowering the prices immaterial of the printed MRP. They have fixed pricing but with good discounts for everyone. Even a novice can buy from such stores without experiencing any misdeed on the part of such a store. Because of various good purchase schemes run by these chain stores on the festive occasions, these stores are visited by numerous customers for daily needs and grocery items. Their exchange policy is also commendable. No foolish questions are asked at the time of returning or exchanging any item. On the contrary, a small retailer or a neighborhood grocery store will never spare a penny as discount despite the fact that he is having the same purchase price while buying the goods from a distributor. He always stands desperate for earning more profit instead of pleasing his customers by means of discounts. He quotes altogether higher rates for the loose items or non branded products. There is no limit to apply higher pricing of such products by him.
He always thinks of short term gains and will rarely respect the customer. To test his friendliness and generosity one can go to return or exchange any item. What to talk of return he will make untoward faces even at the time of simply exchange of an item previously bought. Price is not the only thing the general attitude of any retailer for his daily customer pleases the customer. What will you call this. This is essentially a comparison between ease of doing purchase versus pain of doing purchase from two different entities which is easily noticeable by a wise customer.
Good comparison
This is nothing but tax hungry government.
It has not a single policy to benefit common people but to loot where ever possible. And evven after collecting so much tax, no one knows where is this money going.
Very good for consumers. Ultimately consume spending would be more. Recession would be over. Why sever steps are taken.
This is ambani talking behind modi… bjp is biggest benefictor of reliance
Do these e commerce companies pay taxes to indian government on the profits which they make by selling goods in india? Can anybody explain the correct and legal position.
Why selective application of law? Same way, even Jio also to be put on notice. For the sake of one Co, whole telecom industry including PSU BSNL are on the verge of collapse.
Correct
Govt should focus or interfere only in matters of quality of products sold and ensure consumer is not cheated in any way.
Govt need not worry as products sale through e commerce or retailers is generating revenue and also helping business growth for both manufacturer and seller.
Govt should only intervene or worry if it is not getting its dues by way of taxes.
It is the right of the consumer to buy quality product at a fair / discounted price.
The retailers have looted the consumers day in and out all through these years. They should not cry foul .
Let consumer be the ki g of the market
reliance is running its network onis data channel whereas law says data and voice channel cannot be mixed. other service provider are bound to follow the law and not reliance. govt favors reliance is the example on the cost of independent business.
Modi ke to bachhe nahi he so usko ku6 kharidna nahi par hamari kyu maar raha he,?? Hame sasta mile usme government ko Kya problem he,? Sellers ko thode me jyada kamana he, to ham to wahi jaege jaha fayda hoga.
Do you have same guts to question about reliance JIO?
Where was this activeness was gone when JIO took loan from Nationalised banks to provide free services in attempt to sink BSNL and other operators. First govt try to control prices of medicines which are sold in retail market at five to ten times rate than wholesale rate. Medicines also should be allowed on Amazon Flipkart so that common people gets medicines in reasonable amount.
Government is making fool to us…Government can’t take donations or bribe from foreign investors and local businesses like Big bazaar , Reliance retail etc give huge fund to them so government is safe guarding there businesses. Government is not at all worried about small retailers. If they are worried then why not they are asking same question to big bazaar and Reliance that why they are spoiling retail market. It’s all money game. If they are selling goods in huge discount it means manufacturers like hull, png, itc are making huge profits and government don’t ask them to charge fare price. If manufacturers can give huge discount to big names than why not to small retailers or local buyers which helps the poor to get goods near by without any problems.
They need an action against them. If they are willing wholeheartedly they must be aware from the introduction stage where, from last few years they are making these offers.
False in making and recognising the rules of e commerce.
Crap article, where else can such load of crap find place but ThePrint or the Quint or more such left leaning so called secular/impartial media.
What about Jio. Hasn’t it offered predatory pricing and destroyed airtel, idea, vodafone, bsnl, mtnl etc and saddled banks with lakhs of crores of bad debts. Hasn’t it practices destroyed a sector which was once a sunrise sector. Why such favourable dispensation, just because it’s Reliance
Absolutely right bro .. fair my butt too..
The law is only against selling above MRP and not against giving discounts. Not just to that. Returns, exchanges, etc., were almost impossible with the retailers, and in the remote cases where happens, it would only be after unpleasant exchanges. Govt should think on what is better for the consumer rather than the retailers who are looting the people.
What GOI wants to do, first set out the policy and apply uniformly.
Just to benefit some big corporets retail business they are trying to destroy Amazon and flipcart. They have already done in telecom sector. Keep it up BJP
This is call dogla-panti of government, when jio offered free internet and calls that time Mr.modi attended the jio advertisement.Amazon and Flipkart gives product on minimum profit business rule at festival season than they have pain.
I personally thanks to these online site who cares our festival, with our limited budget life- style.
Government has to stop this as these companies are basically based or owned by foreign entities. If they would continue doing these type of business practices, the local market will not thrive at all. Jeff Bezos is the richest man in the world, Amazon literally clean swiped the American leading giants in different industries such as , toys manufacturers, house products, electronic sellers, and what not. Understand that billions of dollars which were to be distributed among the thousands of different sellers are now going in the pocket of 2-3 e-commerce company. And people who are taking about Jio and why government didn’t interfere , it was because other companies were unnecessarily charging the consumers, thus taking wrong advantage of their monopoly. Jio did not indulge in any wrong practices and broke the exploitative market conditions. Jio did not effect millions of manufactures or people associated with it like e-commerce companies are doing. It just took the market share from 2-3 leading companies who were exploiting the consumers.
What’s problem with the government, they don’t create job opportunities, if created they pay us less but tax us more on each and everything, gobal level crude oil price is low but you you still charge us more, GST on all stuffs increase their cost and loot our hard earned money just like that ..and now those private sectors are providing our utilities at reasonable price you interfere in this an spoil this too what sin we have did other than born in this country. There alot of important stuffs you should worry about why do you punish middle class peoples like this..??
Common Bro don’t tell foreign companies lots of developement taking place employments in India creating by foreign companies which helps in GDP growth. If foreign companies shutdown will you provide govt jobs to all those. Who are working for foreign companies. If foreign companies stop straight away GDO will drop more then 50%.
Jio has caused loss of jobs millions people in Telecom sectors.
Many telecom company has been shut down as they are not so big to compete with jio.
Predatory pricing..
Have any one noticed how high id spectrum prices in india as compares to world other countries..
That’s why the prices were greater in india.
Jio is also destroying the competition.
And will have the whole monopoly in the sector.
Se jio monthly plan minimum 99, if u want to
Be only connected..
Earlier it was zero…
A humble request in order to stop rampant gross and vast misuse and streamline pricing, whether in Retail shops or online, , please have a policy on MRP.
There is unrealistic MRP pricing prevalent and profiteering. Products are given undeserving prices of say 3000, when actually they should not even cost Rs 250. They lure customers with hugh discounts and buy one get one/two offers. We can find them even in our daily use items like rice, oil, grains, etc. Example Rozanna Daily Regular grade Basmati Rice MRP 250 per kg. This rice is worth not more than Rs 75. Who regulates them. Who gave them the pricing of Rs 250 per kg. For Rs 250, one should get one of the best quality basmati rice.
We need to please remember that Most local shops sell their products at MRP and mint money at the cost of the Common Man. They are given hugh margins by the Distributors who also pockets hugh margins for himself. No doubt we have hugh sales of Mercedes. Please if someone can bring it to the notice of the relevant ministry for immediate corrective action. Please let us get MRP issue fixed first. Thank you
I thought no you media people’s are influenced by govt . Finally we should look in to benefits for comman consumer .we should appreciate Flipkart and Amazon for what they are doing .
There is a govt portal for bringing such issues to the attention of the right ministries. Go and file a request. Alternately you can also file an RTI online questioning the required ministry (consumer affairs?) on this practice.