Trouble brews for Amazon & Flipkart giants overrepresentation of favoring select sellers

The Indian e-commerce landscape, dominated by giants Amazon and Walmart-backed Flipkart, has long been under the scrutiny of the Competition Commission of India (CCI) for alleged anti-competitive practices. From deep discounting and vendor bias to high margins, the policies of these platforms have often drawn criticism from regulators and smaller retailers alike.

According to sources, Amazon officials and seller partners recently withdrew from communication groups on messaging platforms. These groups, which facilitated informal discussions between seller partners and vendors, often saw direct involvement from Amazon in business dealings.

“Legally, Amazon cannot participate in discussions about purchase orders, margins, or discounts. However, the company tracks such activities unofficially,” a source familiar with the matter said.

The timing of this exit coincided with the release of a report by Reuterswhich highlighted Amazon and Flipkart’s breach of India’s antitrust laws.

According to the report, an Indian antitrust investigation found both Amazon and Flipkart guilty of favoring select sellers on their platforms. The CCI, in a 2020 investigation, probed that these companies were giving preferential treatment to certain sellers with whom they had business ties, allowing these sellers to dominate search results and sideline competitors.

The findings are documented in two extensive reports — 1,027 pages on Amazon and 1,696 pages on Flipkart — both dated August 9. These reports confirm that the e-commerce giants created an ecosystem where preferred sellers enjoyed a disproportionate advantage.

“Each of the anti-competitive practices alleged were investigated and found to be true,” said both reports, which are not public and are being reported by Reuters for the first time.

The two companies will now review the report and file any objections before CCI staff decide on any potential fines.

The investigation’s findings are the latest setback for Amazon and Flipkart in a country where both companies are already under pressure, facing backlash from small retailers who accuse them of destroying local businesses through aggressive discounting strategies.

Recently, a post on LinkedIn by a small vendor went viral which accused Amazon of placing fake orders and returning them to manipulate the appearance of sales for smaller sellers.

As per an analyst who wished to remain anonymous weighed in on the situation, pointing out that while companies like Amazon and Flipkart legally cannot be involved in direct vendor discussions, these practices have continued under the radar through third-party intermediaries. “They’ve shifted to partnering with e-commerce enablers who onboard sellers and manage inventory. But fundamentally, not much has changed,” he said.

Amazon faces similar questions in the US and European markets.

In light of the news reports, both companies may confront stricter regulations moving forward. “For Amazon and Flipkart, this could be a turning point. They’ll need to rethink their business practices if they want to maintain their foothold in India’s rapidly growing e-commerce market,” he concluded.

The CCI’s decision will be closely watched, as it may redefine how e-commerce operates in India, where the lines between fair competition and dominance are becoming increasingly blurred.

Amazon and Flipkart did not respond to Business Today‘s queries by the time this report was filed.