Blinkit, 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 probe quick commerce platforms such as Blinkit and Zepto following complaints from local retailers, two people aware of the development told Mint on condition of anonymity.

This follows commerce minister Piyush Goyal’s recent warning about the social disruption caused by e-commerce platforms and the risks of predatory pricing that can harm local retailers. Predatory pricing is a tactic where companies lower prices to gain market share before raising them again.

Local retailers have accused quick delivery platforms of anti-competitive practices, a matter the DPIIT has flagged for CCI review, one of the persons quoted above said.

The DPIIT is of the view that although discounts benefit consumers, they can hurt smaller businesses unable to compete on price, and eventually lead to higher prices once competition is reduced, the person said.

While the CCI does not regulate prices, it ensures that competition in the market functions properly.

Queries emailed to the DPIIT secretary, CCI chairman, and the commerce ministry spokesperson on Thursday, as well as to Zepto and Blinkit on Friday morning, remained unanswered till the press time.

“The DPIIT's letter to the CCI chairman highlights complaints against quick commerce entities for engaging in anti-competitive marketing strategies," the second person said. “It points out that these companies are allegedly signing exclusive agreements with certain suppliers, giving specific vendors an unfair advantage and enabling them to dominate the market." 

India’s e-commerce sector is projected 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 Investigation recently reported that Amazon Seller Services Pvt. Ltd. and Flipkart Internet Pvt. Ltd. allegedly breached competition laws by giving preference to certain sellers, launching exclusive products, and offering deep discounts. Both companies are currently facing CCI proceedings, Mint reported on 12 September.

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Ashwani Mahajan, national co-convener of Swadeshi Jagaran Manch (SJM), while talking to Mint, criticised the business model of e-commerce players, calling it a cash-burning model that offers deep discounts, exploits vendors, and undercuts prices to capture market share.

"E-commerce players engage in exclusive launches of mobile phones and other products, which are anti-competitive practices that further disadvantage smaller players and disrupt the market,” Mahajan said. 

During the festival seasons or on special events, e-commerce platforms offer steep discounts that often disrupt the market, putting offline retailers and small online entities 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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