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Attractive discounts by e-commerce majors not competition issue: CCI

Global auditing firms also support the CCI's stand on why the current windfall discounts do not fit in the category of predatory pricing behaviour

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Sudhir Mital
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In light of the ongoing tug-of-war between e-commerce giants and the brick-and-mortar stores, the Competition Commission of India has spoken and the verdict is: the big billion discounts offered by the e-commerce majors are not a competition issue. Speaking to DNA, commission chairman Sudhir Mital explained that there is no need for them to step in and intervene because, "CCI steps in if it is found that the dominant player is indulging in predatory pricing to exclude others."

Recently, Flipkart and Amazon concluded a major festive sale whereby they offered discounts ranging between 45-55 per cent on electronics, including mobile phones and accessories. Flipkart is still offering upto 75 per cent discount over a range of consumer products.

Global auditing firms also support the CCI's stand on why the current windfall discounts do not fit in the category of predatory pricing behaviour. "Fundamentally, it is the market forces that determine the pricing. CCI can intervene only when a dominant player, who is able to unfairly influence the market, resorts to predatory pricing or creating constraints on supply side or by forming cartel," said RSM India founder Suresh Surana.

Another reason why the e-commerce companies have got a breather from CCI is because they are perceived as aggregators that provide a platform to trade rather than traders themselves. Hence, they do not violate the Competition Act, experts say.

"If e-commerce companies become dominant in their business of providing online platforms, then they may come under the radar of CCI, that too only if their practices violate any provision of the Competition Act," said Rajiv Khaitan, Partner, Khaitan & Co.

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