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CONSTANTIN BRANCUSI

India about to apply new rules on e-commerce market

06.03.2019


As of February 1, 2019, e-commerce companies such as Amazon, Walmart, or Flipkart Group will no longer be able to sell products belonging to the companies in which they have an equity interest. They will also no longer be able to conclude exclusive agreements with sellers. These measures aim at balancing the market and giving equal opportunities to all local traders who have claimed the existence of an unfair market resulting from the e-commerce platforms way of selling products.

At this point, the problem lies in the fact that e-commerce companies can control the market and sell at very attractive prices, buying in bulk through their group companies, which in turn sell their products to certain vendors with whom they have advantageous agreements. Those sellers then sell the products at attractive prices. This creates a discriminatory market in which small local traders find themselves unable to compete with the low level of prices offered by notorious platforms. In other words, Amazon or Flipkart, against whom petitions were filed at the Competition Commission of India, favors traders they partly own and thus violate the rules of competition in the market by practicing preferential treatment.

The tightening of e-commerce rules aims at creating and respecting an impartial competition framework. In consequence, will be obtained an equal treatment of how services are delivered to sellers on e-commerce platforms. Thus, smaller businesses will be able to grow their impact on the market.

Once implemented, the new order will decrease the chances of abuse, the use of a predatory pricing policy and deep discounts from players operating in the e-commerce industry. The new rules will counter the tactics they have adopted to control and dominate the retail market in India through e-commerce.

At this time, there is no clear reaction from the companies affected by the new measures. Amazon India said it is assessing the situation, and Flipkart did not provide any comments on the matter.

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