A recent investigation by India's Competition Commission of India (CCI) has found that U.S. e-commerce giants Amazon and Walmart's Flipkart violated local antitrust laws by favoring select sellers on their platforms. The findings, detailed in two reports, mark a significant setback for the companies, which are major players in India's rapidly growing e-retail market.
The CCI launched its investigation in 2020 following allegations that both companies promoted certain sellers with whom they had business ties, giving them preferential treatment in search results. The reports—spanning 1,027 pages for Amazon and 1,696 pages for Flipkart—were finalized on August 9 and reveal that both companies created a system where preferred sellers were consistently pushed to the top, effectively sidelining other sellers.
Neither Amazon nor Flipkart, along with the CCI, responded immediately to requests for comment. Both companies have previously denied any wrongdoing, asserting that their business practices comply with Indian laws. However, they now face the challenge of reviewing the investigation’s findings and filing objections before the CCI determines any potential penalties.
The investigation stems from a complaint lodged by the Delhi Vyapar Mahasangh, an affiliate of the Confederation of All India Traders (CAIT), representing 80 million small retailers. CAIT welcomed the findings, saying it would further study the reports and bring the matter to the federal government. The traders' body has long criticized Amazon and Flipkart for offering deep discounts, which it claims have severely impacted smaller businesses.
The reports underscore how both companies allegedly manipulated their platforms to benefit a select group of sellers. In Amazon's case, a Reuters investigation in 2021 revealed that the company gave preferential treatment to a small group of sellers, allowing them to bypass Indian laws. Amazon denied these claims, but the CCI said the Reuters findings corroborated its own evidence.
Flipkart faced similar accusations in the CCI report, with investigators finding that the company provided certain sellers with services like marketing and delivery at significantly reduced costs. These sellers were enabled to sell smartphones at steep discounts, a practice the CCI referred to as "predatory pricing." The report noted that such practices have had a "catastrophic impact on the existing competition in the market."
Both Amazon and Flipkart dominate India’s e-commerce sector, which was valued at approximately $57-60 billion in 2023 and is projected to reach $160 billion by 2028, according to consultancy firm Bain & Company. However, their business practices have consistently drawn criticism from smaller retailers, who argue that deep discounts and preferential listings are hurting their ability to compete.
As the CCI prepares to consider fines and other penalties, the findings mark yet another regulatory hurdle for the two e-commerce giants, whose dominance in India’s booming market is now under increased scrutiny.
