Amazon deal hurdles

New Delhi: The possible coming together of online retailers Amazon and Flipkart is likely to face close scrutiny on competition issues as the combined entity will be a dominant player in the fast growing Indian e-commerce market, according to experts.

While there is no formal announcement from any quarter on the possible multi-billion dollar deal, reports indicate that discussions involving Flipkart and Amazon are going on.

Engaged in intense competition, homegrown Flipkart and Amazon India are leading players in the Indian online retail market place.

Deals beyond a certain threshold require the approval of the Competition Commission of India (CCI) before they are consummated. In cases where the watchdog finds possible anti-competition issues, it can call for remedial measures to address the concerns.

"The Amazon-Flipkart deal will have to take the approval of the CCI in order to sail through. The CCI will have to examine the relevant markets and the combined market share of the two parties, which in this case would be around 80 per cent (which) would pose challenges to the deal," consultancy Corporate Professional's Founder Pavan Kumar Vijay said.

There have been instances where the anti-trust regulator had given approvals for mega deals subject to strict conditions.

Not-for-profit group CUTS (Consumer Unity and Trust Society) International said the merger of Flipkart and Amazon might impact the merchants negatively though as they would have limited bargaining power because of the absence of competition among online market platforms.

"Any abuse of dominance, in the form of the merged entity dictating its terms and condition on merchants, is also a perceived threat. The merger may also impact offline retailers, if lower cost products are available on online platform, owing to lower costs associated with using information and communication technology," it said in a statement.

"While the merger may result in the rise of a dominant player (approximately 90 per cent online market share), it will have limited impact on consumers, who will keep benefiting from the competition among merchants." it added.

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