India is standing up to transnational e-commerce behemoths like Amazon and Flipkart Group with new rules barring companies from selling products from companies they partially own.
E-commerce companies will no longer be able to sell products from companies in which they have an equity interest, nor will they be able to form exclusive agreements with sellers or apply cash-back offers and other incentives to affiliate sellers differently than they apply to non-affiliates, according to new rules which take effect February 1.
The new rules are aimed at clamping down on monopolistic behavior by gargantuan transnational e-tailers. Amazon, Flipkart and other large companies are currently able to undercut the prices of their competitors by buying products in bulk through companies they control and re-selling to affiliates, which then set their prices low enough to drive non-affiliated firms out of the market.
Indian retailers, concerned that their days are numbered with such “predatory pricing” practices dominating the market, successfully pushed back with a series of anti-trust petitions earlier this year that have culminated in the new regulations.
The All India Online Vendors Association (AIOVA) filed a petition in October with the Competition Commission of India, the body charged with enforcing anti-trust matters, alleging that Amazon gives preferential treatment to those sellers in which it has an equity interest. The group filed a similar petition against Flipkart in May.
The Confederation of All India Traders had objected to Walmart’s $16 billion acquisition of Flipkart in May, warning that the move would create exactly the “unfair competition” and “predatory pricing” the new rules seek to address. CAIT secretary general approvingly stated that the new rules, if implemented in full, would put an “embargo on the tactics adopted by the global players to control and dominate retail trade in India through e-commerce.”
Beefed-up regulations have come not a minute too soon, with Google introducing Google Shopping to India earlier this month.