Predatory pricing: Goyal summons Amazon, Flipkart to discuss CAIT complaint

The leadership of e-commerce giants Flipkart and Amazon India has been called by Commerce and Industry Minister Piyush Goyal for a meeting on Thursday to discuss charges against them by the Confederation of All India Traders (CAIT).

The trader body met him on Wednesday with what it said was evidence of ‘deep discounting and predatory pricing’ by both the entities at their recent festive season sale. According to sources, the minister had earlier planned to meet Amazon India and Flipkart a few weeks later. However, after a CAIT delegation met Goyal with ‘proof’, the minister called the meeting on Thursday.

A Delhi-based body, CAIT describes itself as a premier representative of small and medium-size traders. It has been a strong advocate for this traditional (brick and mortar) segment and critical of the online one.

Sources in both companies said who was to be in the delegation to meet the minister was still being decided. “Senior leadership, public policy team members and seller ecosystem managers would all be part of the meeting. But, if the top bosses for both Amazon India and Flipkart will be there is still being decided,” said a source in the know.

The CAIT delegation was led by its secretary-general, Praveen Khandelwal. There was also Arvinder Khurana, president, All India Mobile Retailers Association, and Dhairyasheel Patil, president, All India Consumer Products Distributors Federation. Guruprasad Mohapatra, secretary of the department for promotion of industry and internal trade and other officers attended.

"The minister firmly said the government was committed to implement the FDI (foreign direct investment) policy in its letter and spirit. No predatory pricing or deep discounting will be allowed under any circumstances. Any re-routing of business in e-commerce will not be allowed. E-commerce companies will have to work only as a marketplace, as spelt out in FDI policy," Khandelwal said.

CAIT said Goyal directed the Mohapatra to call both the firms to clarify on the points raised. A joint meeting with CAIT might also happen later.

“The minister assured the delegation that if need arises and unethical business practices are proven, the government might order an investigation," said Khandelwal.

CAIT says it has given various items of evidence on predatory pricing, deep discounting, exclusivity and promoting of preferred sellers on the platforms of various e-commerce companies. And, that much against the intention of FDI policy, these companies are greatly influencing prices and creating an uneven playing field, prohibited under the policy.

CAIT says there must be a government audit of how e-commerce portals function, including the business done by sellers and their authenticity. And, as an interim measure, a ban on the portals.

"The system of cash on delivery should be stopped and all payments by consumers should be made digitally. An e-commerce ombudsman should be constituted to look into the grievances of the consumers. The condition of data localisation should be made mandatory for such e-commerce companies," said Khandelwal.