CAIT demands special regulator for e-commerce sector amid concerns over monopolistic practices

The Confederation of All India Traders (CAIT) has intensified its efforts for regulatory reform in India’s e-commerce sector, calling for the creation of a specialized, separate and active regulatory body to oversee digital retail platforms.

In a letter to Finance Minister Nirmala Sitharaman, the traders’ body expressed concerns that the Competition Commission of India (CCI) has failed to effectively regulate the monopolistic practices of e-commerce giants Amazon and Flipkart. CAIT stressed that without targeted oversight, India’s retail landscape could be irreparably damaged, leaving small and medium-sized retail businesses unable to compete.

Market manipulation

The CAIT letter highlights the detrimental impact of Amazon and Flipkart’s practices on the Indian retail sector. E-commerce platforms have been accused of offering deep discounts, made possible by foreign direct investment (FDI), in order to disempower small traders. By selling products below cost, Amazon and Flipkart have driven independent sellers out of the market. This enabled both companies to gain near-monopoly control over the online retail sector, with adverse consequences for consumers and competition.

The letter details how these e-commerce giants have exclusive partnerships with mobile phone manufacturers, making popular devices available exclusively through their platforms. This not only harms local traders, but also limits choice for consumers. CAIT claims that the predatory pricing strategies of Amazon and Flipkart have resulted in heavy losses for local retailers while enabling e-commerce companies to monopolize key product categories.

Charges against CCI

The letter says that despite numerous complaints filed by CAIT and other industry associations, CCI is slow to act. Investigations into these practices, including a case filed in 2019, have dragged on for years without significant enforcement action. Even after CCI raids in 2022 uncovered evidence of predatory pricing and market manipulation, CAIT maintains that the regulator has failed to take decisive steps to curb this illegal activity.

The letter criticized the CCI for its “no-nonsense approach” to investigating Amazon and Flipkart for their alleged anti-competitive practices. CAIT has accused the competition watchdog of dragging its feet despite mounting evidence against e-commerce giants that have allowed them to dominate the Indian retail market at the expense of small and medium-sized traders.

The letter also accuses CCI officials of complicity in delaying the investigation. According to CAIT, a senior official met Flipkart’s CFO under questionable circumstances, suggesting undue influence in the investigation. The letter also revealed that key CCI officials have given “assurances” to Amazon and Flipkart, stating that no significant action will be taken against them.