Competition Commission to investigate Flipkart, Amazon deep discounting on mobile phones
The Competition Commission of India (CCI) has launched an investigation to find out if the exclusive arrangements, deep discounting and preferential listing by e-commerce marketplaces like Amazon and Flipkart for mobile phones are causing an adverse effect on competition.
 
The CCI on Monday passed directions for investigation under Section 26(1) of the Competition Act, 2002. The order was passed by Ashok Kumar Gupta, chairman, Sangeeta Verma and Bhagwant Singh Bishnoi, both members.
 
In a 11 page order, the CCI observed that the exclusive arrangements between smartphone/mobile phone brands and e-commerce platform/select sellers selling exclusively on either of the platforms, coupled with the allegation of linkages between these preferred sellers and e-commerce companies merits an investigation.
 
The CCI noted that though these platforms are used for selling various categories of products, for some categories the online channel constitutes a predominant channel of distribution. Smartphones is one such category of product. The Informant has claimed that Amazon and Flipkart had 36 per cent and 53 per cent market share, respectively, in the market for smartphones sold on online marketplaces in India in the first quarter of the year 2019.
 
On careful perusal of allegations levelled by the Informant and the documents provided, the Commission noted that there are four alleged practices on the marketplaces, namely, exclusive launch of mobile phones, preferred sellers on the marketplaces, deep discounting and preferential listing/promotion of private labels.
 
The first issue under examination is that of the exclusive launch of mobile phones on the two major e-commerce platforms. The Informant has provided a list of phones which were exclusively launched on the platforms. The Informant has provided the following evidence in the form of text messages to indicate that due to partnership between mobile manufacturer (Vivo Z1x and Vivo U10 models) and platforms (Flipkart and Amazon), offline retailers are forced to purchase smartphones either from manufacturers' e-stores or from the platforms e-portals.
 
The Commission has also noted several reports in the media as well as advertisements by e-commerce portals regarding exclusive launches. Mobile manufacturing companies like One Plus, OPPO, and Samsung have exclusively launched several of their models on Amazon. Similarly, Vivo, Realme, Xiomi etc., have exclusively launched several of their models on Flipkart. In 2018, Flipkart launched 67 mobile phones and Amazon launched 45 mobile phones exclusively on its platform. 2 Thus, it appears that these mobile manufacturers partner with the e-commerce platforms and their brands are sold by the platforms' exclusive sellers.
 
"It needs to be investigated whether the alleged exclusive arrangements, deep-discounting and preferential listing by the opposite parties (Ops) are being used as an exclusionary tactic to foreclose competition and are resulting in an appreciable adverse effect on competition contravening the provisions of Section 3 (1) read with Section 3(4) of the Act," the order said.
 
"In view of the foregoing, the Commission is of the opinion that there exists a prima facie case which requires an investigation by the Director General (‘DG'), to determine whether the conduct of the OPs have resulted in contravention of the provisions of Section 3(1) of the Act read with Section 3(4) thereof, as detailed in this order," it added.
 
Accordingly, the Commission directs the DG to cause an investigation to be made into the matter under the provisions of Section 26(1) of the Act. The Commission also directs the DG to complete the investigation and submit the investigation report within a period of 60 days from the receipt of this order.
 
The case was filed by Delhi Vyapar Mahasangh as the informant versus Flipkart Internet, owned by Walmart and Amazon Sellers, as opposite parties.
 
The traders body has stated that the that there are instances of several vertical agreements between Flipkart with their preferred sellers on the platform and Amazon with their preferred sellers, respectively which have led to a foreclosure of other non-preferred traders or sellers from these online marketplaces. It has been alleged that most of these preferred sellers are affiliated with or controlled by Flipkart or Amazon, either directly or indirectly.
 
On deep discounting, the complaint says that Flipkart provides deep discounts to a select few preferred sellers (such as Omnitech Retail) on its platform which adversely impacts non-preferred sellers such as members of the Informant from competing with such sellers on Flipkart's online platform.
 
Similarly, Amazon has preferred sellers on its platform namely Cloudtail India (a joint venture between Amazon and Catamaran Ventures) and Appario Retail (a wholly owned subsidiary of a joint venture between Amazon and Ashok Patni which received a round of investment from Frontizo Business Services Ltd.) which are related to Amazon. Similar allegations of deep discounts by Amazon to the detriment of non-preferred sellers have been levelled.
 
On exclusive tie-ups and private labels, the complaint said that both the e-commerce players have several tie-ups and private labels which get more preference in terms of sales. The OPs' private label brands, sold through their platforms, are routed through a few preferential sellers.
 
It is submitted by the Informant that this modus operandi is being employed by Flipkart across all categories, including smartphones. It is alleged that by having exclusive tie-ups in the relevant market with the smartphone companies, it provides exclusivity through discounting and preferential listings. 
 
This leads to other competitors being excluded and foreclosed from the market. It is stated that any benefit to the consumers is only apparent at the initial stage till critical mass of network effects is reached or competitors are eliminated.
 
"This arrangement has far-reaching consequences on the economy as the non-preferred sellers are relegated to sell only through traditional brick and mortar set-up which involves significant fixed costs and are devoid of wide pan-India reach which online marketplaces offer," the complaint said.
 
Based on the evidence adduced by the Informant and information available in the public domain, it can be prima facie inferred, CCI said that there appears to be exclusive partnership between smartphone manufacturers and e-commerce platforms for exclusive launch of smartphone brands. Thus, exclusive launch coupled with preferential treatment to a few sellers and the discounting practices create an ecosystem that may lead to an appreciable adverse effect on competition, the order said.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    Jio launches voice & video Wifi calling
    Taking on Airtel, Reliance Jio on Wednesday announced the availability of nation-wide Voice and Video over Wi-Fi service which will work on any Wi-Fi, anywhere in India and supports over 150 handset models.
     
    The service makes crystal-clear voice and video calls through Wi-Fi at no additional cost. 
     
    "To further reinforce its customer-obsession and offer the best products and experience to its consumers, Jio today announced the launch of nation-wide Voice and Video over Wi-Fi service. Jio has been testing this service over the past few months, to provide a robust experience to every customer at launch," the company said.
     
    The key differentiators that come with Jio Wi-Fi Calling are, Jio said, are that customers can use any Wi-Fi network for Jio Wi-Fi-calling and the voice and video calls will seamlessly switch-over between VoLTE and Wi-Fi to provide an enhanced voice/video-calling experience. 
     
    "Jio Wi-Fi calling works on the largest ecosystem of handsets. Jio customers can also make Video over Wi-Fi calls And all of this comes at no additional cost!" it said.
     
    On the launch of this service, Jio Director Akash Ambani said: "At Jio, we are constantly innovating to enhance customer experience or solve their problems. At this juncture, when an average Jio consumer uses over 900 minutes of voice calls every month, and at a growing base of consumers, the launch of Jio Wi-Fi Calling will further enhance every Jio consumer's voice-calling experience, which is already a benchmark for the industry with India's-first all VoLTE network."
     
    To enable Jio Wi-Fi Calling, a step-by-step guide has been made available on Jio.com/wificalling and Jio Wi-Fi Calling will be enabled pan-India between January 7 and 16, 2020, it said.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    5 Ad Trends to Be Wary of in 2020. Computer Generated Imagery Influencers Are Here
    Consumers have a lot to watch out for in terms of deceptive advertising trends in 2020.
     
    Here are five TINA.org will be keeping an eye on in the new year.
     
    CGI (Computer-Generated Imagery) Influencers
     
     
    In its Endorsement Guides for social media influencers and the brands they promote, the FTC says “the most important principle” is authenticity. Above all, the FTC says, the endorsement must reflect “the accurate experience and opinion of the endorser.” But what if the endorser isn’t human?
     
    CGI influencers, also known as virtual influencers or virtual beings, can be indistinguishable from their human counterparts on Instagram. In fact, a 2019 study conducted by the social content company Fullscreen found that 42 percent of Gen Z and millennials have followed a CGI influencer without realizing it. (According to the New York Times, the CGI influencer pictured above, Lil Miquela, who currently has 1.8 million followers on Instagram, operated for two years before it was revealed that she was the product of a secretive, Silicon Valley-backed company, Brud.) Yet 55 percent of people who followed CGI influencers made a purchase because of them, the study found, providing an answer to its title, “Can CGI Influencers Have Real Influence?” Whether the FTC updates its endorsement guides to specifically address some of these brand-loving bots, we’ll just have to wait and see.
     
    Unauthorized use of FDA logo
     
    When TINA.org asked Snow Teeth Whitening in July 2019 what the FDA’s logo was doing on its kits when the FDA prohibits the use of its logo on “private sector materials,” the company responded that “a large consulting firm” with regulatory ties had given it permission to display the logo on product packaging. It didn’t name the firm. Then TINA.org alerted the FDA to Snow’s use of its logo and within a few weeks, it vanished from photos of the teeth-whitening kit on the company’s website and social media pages.
     
    Snow website before:
     
     
    Snow website after:
     
     
    Oddly enough, Snow wasn’t the only product that TINA.org found with the FDA logo on packaging in 2019, not even the only teeth-whitening kit. TINA.org also stumbled upon iSmile making unauthorized use of the agency’s emblem on product packaging. But when TINA.org contacted iSmile, the company took prompt corrective action.
     
    The takeaway for 2020? If you see the FDA’s logo on a teeth-whitening kit (or any product for that matter), don’t confuse it with an endorsement by the agency. It probably shouldn’t be there.
     
    MLMs facing pyramid scheme charges
     
     
    If 2020 is anything like the last few months of 2019, it will be a bad year for companies that attempt to disguise themselves as multilevel marketing firms, or MLMs, but are in fact pyramid schemes according to the FTC.
     
    After bringing only four pyramid scheme cases in the previous 11 years, the FTC filed two such cases in late 2019, both against Texas-based MLMs that sell supplements. While Neora is fighting the FTC’s lawsuit (here’s why we’re confident the company’s case won’t hold up in court), AdvoCare has already settled FTC charges that it rewarded recruitment over product sales, one of the hallmarks of an illegal pyramid scheme. Meanwhile, both companies remain in good standing with the Direct Selling Association, the national trade organization for the MLM industry that touts a commitment to “the highest ethical business standards.”
     
    Fake chocolate and vanilla
     
     
    If you haven’t given up your sweet tooth for 2020, a word of caution about several chocolate and vanilla products: They may be missing the key ingredient. As 2019 was coming to a close, it seemed that a trend in class-action litigation targeting the ingredients in a number of chocolate and vanilla products, ranging from chocolate cereals to vanilla ice cream to vanilla soy milk, was only gaining momentum. Our advice? Check the ingredients on the back before tossing the item in your shopping cart.
     
    Use of bogus RCTs (randomized, placebo-controlled trials)
     
     
    One of the more disturbing deceptive ad trends TINA.org will be tracking in the new year is the use of bogus RCTs (randomized, placebo-controlled trials) in support of claims that products are “clinically tested” or “clinically proven.” In 2019, MyPillow paid $100,000 to settle a false advertising lawsuit related to the promotion of a sham sleep study. The study served as the basis for claims that its pillow reduces the symptoms of sleep apnea sufferers, among other purported benefits. Also in 2019, the FTC and New York state got the go-ahead to proceed with their lawsuit against Quincy Bioscience, which for years has been deceptively claiming that its supplement Prevagen is clinically proven to improve memory.
     
    Find more of our coverage on deceptive ad trends here.
     
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