Blinkit and Zepto to face CCI scrutiny after complaints from local retailers

New Delhi: The Department for Promotion of Industry and Internal Trade (DPIIT) has asked the Competition Commission of India (CCI) to investigate instant trading platforms such as Blinkit and Zepto following complaints from local retailers, two people familiar with the developments said. Mint on condition of anonymity.

This comes after Commerce Minister Piyush Goyal’s recent warning about the social disruption caused by e-commerce platforms and the risk of predatory pricing that could hurt local retailers. Predatory pricing is a tactic in which companies lower prices to gain market share and then raise them again.

Local retailers have accused fast-delivery platforms of anti-competitive practices, a case that has been referred to the CCI for review, said one of the people cited above.

DPIIT believes that while the discounts are good for consumers, they could hurt smaller businesses that are unable to compete on price, and ultimately lead to higher prices as competition diminishes, the person said.

Although CCI does not regulate prices, it ensures the proper functioning of competition in the market.

Queries sent via email on Thursday to the DPIIT secretary, CCI chairman and the Commerce Ministry spokesperson, as well as to Zepto and Blinkit on Friday morning, remained unanswered till the time of going to press.

“The DPIIT letter to the CCI chairman highlights complaints against quick commerce players for engaging in anti-competitive marketing strategies,” the second person said. “It indicates that these companies allegedly sign exclusivity agreements with certain vendors, giving certain vendors an unfair advantage and enabling them to dominate the market.”

India’s e-commerce sector is expected to reach $325 billion by 2030, driven by the country’s 881 million internet users. Currently valued at $70 billion, e-commerce accounts for about 7% of India’s retail market, according to Invest India.

The CCI’s Director General of Investigations recently reported that Amazon Seller Services Pvt. Ltd. and Flipkart Internet Pvt. Ltd. allegedly violated competition laws by giving preference to certain sellers, introducing exclusive products and offering deep discounts. Both the companies are currently under CCI investigation, Mint reported on September 12.

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Ashwani Mahajan, National Co-Convener of Swadeshi Jagaran Manch (SJM), while talking to Mintcriticized the business model of e-commerce players, calling it a model of burning money, offering deep discounts, exploiting suppliers and undercutting prices in order to gain market share.

“E-commerce players are engaging in exclusive launches of mobile phones and other products, which is an anti-competitive practice that further discriminates against smaller players and distorts the market,” Mahajan said.

During festival season or special events, e-commerce platforms offer steep discounts that often distort the market, putting offline retailers and small online players at a disadvantage, said Manish K. Shubhay, partner at The Precept-Law Offices. “These practices raise concerns under competition law as they can harm fair competition. It is important to address these issues to ensure a level playing field for all.”

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