Mumbai: The Forum for Internet Retailers, Sellers & Traders (FIRST) has dragged Walmart-owned Flipkart Group to the Competition Commission of India (CCI), seeking a fresh investigation into the conduct of the company over practices designed to distort competition, benefit few preferred sellers and exclude scores of small retailers from the marketplace system.In its 157-page complaint to CCI, filed on July 2, FIRST alleged that Flipkart put in place a structural and operational mechanism to distort competition by facilitating and sustaining deep discounting across product categories at a marketplace-wide level. FIRST also alleged that the group generated a “self-replenishing reservoir of funds” estimated at about Rs 3,000 crore annually through the reduction or avoidance of GST liabilities related to its logistics and fulfilment operations, which it uses to sustain “exclusionary pricing conduct.” TOI has a copy of the complaint. FIRST is an affiliate of India SME Forum. Flipkart did not respond to any queries .“This subsidy pool is deployed through the ecosystem of preferred sellers in the form of incentives, rebates and discounts….ultimately reflected in lower retail prices that independent sellers cannot match without sustaining significant losses or being driven out of business,” FIRST alleged. The association said that the complaint raises a “distinct and wide-ranging competition concern,” going beyond just the existence of deep discounting. “The present information is not limited to any particular product category and seeks an investigation into a broader marketplace-wide conduct by Flipkart and its group entities/affiliates,” FIRST alleged. This spells fresh fresh trouble for Flipkart, which is which is preparing for a public listing on the local bourses. Through its B2B arm, Flipkart India, the firm supplies goods below the cost of procurement to a set of 33 preferred sellers, which in turn resell those goods on Flipkart’s marketplace at below-cost prices. “It is submitted that Flipkart has structured its operations to operate an inventory-based model in substance while presenting itself as a marketplace in form,” FIRST alleged in the complaint.Vinod Kumar, president at India SME Forum and founder trustee at FIRST, confirmed the CCI filing. “India SME Forum fully supports innovation, investment and the growth of e-commerce. At the same time, platform neutrality and equal opportunity for all sellers are essential if MSMEs are to fully realise the benefits of the govt’s reforms. Our representation before the CCI seeks an objective examination of these issues,” Kumar told TOI. The anti-competitive arrangements between Flipkart, Flipkart Group and Flipkart sellers are in contravention of Section 3(4) of the Competition Act. The abuse of dominant position by the company is in contravention of Section 4 of the Competition Act, FIRST said, seeking an investigation into the conduct of Flipkart Group and examination of the role of all entities involved in the conduct. “Foreclosure of access from the Flipkart marketplace platform effectively forecloses the access of these independent sellers to 60% of the e-commerce sector (in terms of GMV),” argued FIRST.For years, small traders have been protesting against the alleged unfair practices of online marketplace giants Flipkart and Amazon, pushing the govt to tweak FDI rules in e-commerce in 2018. In 2020, CCI initiated an investigation into alleged malpractices by Flipkart and Amazon India on a complaint filed by another trade body, Delhi Vyapar Mahasangh, a matter in which no final order has been issued yet.Small retailers led by the All India Consumer Products Distributors Federation (AICPDF) are now also up against Flipkart and Amazon’s aggressive quick-commerce push, raising concerns over FDI policy compliance and deep discounting.
