Amazon, Flipkart violated competition laws, says antitrust watchdog: report

Samsung, Xiaomi and other smartphone companies conspired with Amazon and Walmart-owned Flipkart to offer their products exclusively on the e-commerce companies’ Indian websites, violating antitrust laws, according to regulatory reports seen by Reuters.

As reported by Reuters this week, antitrust investigations by the Competition Commission of India (CCI) have found that Amazon and Flipkart violated local competition laws by giving preference to select sellers, prioritizing certain deals and providing deep discounts on products.

The 1,027-page CCI report on Amazon also found that the Indian units of five companies – Samsung, Xiaomi, Motorola, Realme and OnePlus – “were engaged in the practice of exclusive” phone launches in “collusion” with Amazon and its subsidiaries, in violation of competition laws.

In the case of Flipkart, the 1,696-page CCI report found that similar practices were used by the Indian units of Samsung, Xiaomi, Motorola, Vivo, Lenovo and Realme.

The inclusion of smartphone makers like Samsung and Xiaomi in the case could increase their legal and compliance issues.

“Exclusivity in business is a curse. It is not only against free and fair competition but also against the interests of consumers,” CCI Additional Director General GV Siva Prasad wrote in the Amazon and Flipkart reports, in identical findings.

Reuters was the first to report that smartphone companies were accused of anti-competitive conduct in non-public CCI reports dated August 9.

Xiaomi declined to comment, while other smartphone makers did not respond to requests for comment.

Amazon, Flipkart and CCI have not responded and have not yet commented on the reports’ findings.

Both CCI reports said that Amazon and Flipkart had “consciously downplayed” allegations of exclusive launches during the investigation, but officials said the practice was “widely followed.”

Counterpoint Research data shows that South Korea’s Samsung and China’s Xiaomi are the two largest smartphone makers in India, with a combined market share of almost 36%, while China’s Vivo has 19%.

Consulting firm Bain estimates that the Indian e-commerce market will cross $160 billion by 2028, up from $57-60 billion in 2023.

The investigation findings represent a major setback for Amazon and Flipkart in a key growth market where they have faced the wrath of small retailers for years for hurting their offline businesses.

CCI also said the two companies used their overseas investments to offer subsidised rates for services such as warehousing and marketing to a select group of sellers.

ONLINE SALES DEVELOPMENT

According to an internal CCI document dated August 28, also seen by Reuters, some smartphone companies — Xiaomi, Samsung, OnePlus, Realme and Motorola — have been required to provide the CCI with financial statements for three fiscal years through 2024, certified by their auditor.

The investigation into Amazon, Flipkart and their sellers was initiated in 2020 after a complaint by an organisation affiliated with India’s largest retail association, the Confederation of All India Traders, which has 80 million members.

The CCI will in the coming weeks consider any objections to the commission’s findings by Amazon, Flipkart, an association of retailers and smartphone companies, and could potentially impose financial penalties and require the companies to change their business practices, people familiar with the matter said.

Indian retailers have repeatedly accused Amazon, Flipkart and smartphone makers of exclusive online phone launches, saying store owners suffered as they were unable to buy the latest models and customers were looking for them on the stores’ websites.

“The exclusive launches have severely impacted not only the regular sellers on the platform but also the retailers to whom the mobile phones were delivered much later,” reads both CCI reports, citing analyses of data from smartphone companies.

Research firm Datum Intelligence estimates that 50% of phone sales were online last year, up from 14.5% in 2013. Flipkart would have a 55% share of online phone sales in 2023, and Amazon 35%.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)