Anti-trust case: CCI asks Amazon, Flipkart to share financials to decide penalty

These statements will form the basis for determining the penalty, depending on the outcome of the regulator’s hearing of the companies’ defence in the four-year-old case.  

A 2023 amendment to the competition law empowers the CCI to impose a penalty of up to 10% of global turnover or income, of three preceding financial years on each of the parties for anti-competitive conduct.

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The global turnover is likely to include the revenue earned by the entity in India and abroad. It is unlikely to include the turnover of any sister enterprise doing business in another market, according to experts.

After the findings of CCI’s Director General of Investigation (DG) appeared in media, Amazon and Flipkart wrote to CCI expressing concerns about some of the sensitive information in non-confidential reports circulated to the parties turning public, the two persons cited above confirmed. One of them suggested that CCI withdraw the report and issue a fresh one, as it has previously done in the case of Apple, they said.

“CCI is looking into it and will act on it shortly," said the first person quoted above.

On 13 August, Business Standard reported quoting Reuters that CCI ordered “an unusual recall" of reports of an investigation that allegedly found Apple breached competition laws in a separate case, after the US giant complained its commercial secrets were disclosed to opponents, including Tinder-owner Match Group Inc.

The DG’s findings, which will form the basis for CCI’s adjudication on the case, looked into complaints of alleged anti-competitive conduct. Once the confidential version of the report is shared with the companies subsequently, the companies will get to defend their case.

The development comes after the DG attached to the CCI in August confirmed suspected violations of competition law by the two e-commerce platforms. It looked into practices like giving preferential treatment and preferential listing to certain sellers on the platform, exclusive product launches and deep discounting, affecting small retailers on the platform and outside.

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“We do not have any comments on the leaked findings of DG’s investigation," a spokesperson for Amazon said in response to Mint's emailed query.

Emails sent on 18 September to the CCI and Flipkart seeking comments for the story remained unanswered at the time of publishing. 

Unfair practices

“India’s digital economy is thriving, but there's a growing concern: Are consumers and small sellers truly benefiting, or are they being edged out by e-commerce giants? When certain select sellers enjoy preferential treatment—better visibility, deeper discounts, or exclusive deals—the competitive balance is disrupted. Small businesses suffer, and consumers face fewer choices," said Prakhar Mithal, advocate at law firm Kings & Alliance Llp.

Private labels by an e-commerce platform consistently appearing at the top of search results make it difficult for smaller brands to gain visibility, Mithal said. This dual role—acting both as the marketplace and a competitor—creates an uneven playing field where smaller businesses are sidelined and consumer choice is limited, he added. 

Experts said transparency and fair competition in the market are key to sustainable growth. 

“The government must ensure that legal frameworks governing e-commerce are applied uniformly and transparently to foster equitable competition between e-commerce platforms and traditional retail outlets," said Manmeet Kaur, partner at law firm Karanjawala & Co.

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Regulatory measures should prioritize consumer welfare by guaranteeing fair pricing, product accessibility, and robust data protection, Kaur said. Initiatives like the Open Network for Digital Commerce (ONDC) are instrumental in empowering small businesses, enabling them to compete effectively against larger e-commerce entities, Kaur added.

Mithal cited the European Union's ex-ante regulations for the digital economy and said a proactive regulatory framework to prevent platforms from abusing their algorithms to favour certain sellers was needed even in India. “Products from all sellers should have a fair shot at being listed prominently based on quality, price, and customer satisfaction—not just based on the platform's partnerships," said Mithal.

On Friday, the corporate affairs ministry implemented a change in the competition law enacted last year, requiring the CCI to give a hearing to all the parties in a case, including the complainant, after the conclusion of the probe but before passing a final order. 

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The CCI has been granting this hearing opportunity to all the parties on its own, following the principle of natural justice, but now it has become a legal obligation for the regulator and a right for all the parties. The current investigation into the two e-commerce platforms was initiated on a complaint by a trade association, Delhi Vyapar Mahasangh.