A group of MSME traders engaged in the sale of smartphones and related accessories have approached the Competition Commission of India (CCI), raising concerns about unfair trade practices on online marketplaces. DownBask

The facts of the given situation is similar to a decided case between Delhi Vyapar Mahasangh v. Flipkart & Ors. decided by Competition Commission wherein Director General of Competition Commission of India (CCI) directed to carry out investigation based on the allegations levelled by the Delhi Vyapar Mahasangh. On careful perusal of allegations levelled by the Informant and the documents provided, the Commission notes 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. Commission also noted several reports in the media as well as advertisements by e-commerce portals regarding exclusive launches. Based on the evidence adduced by the informants and information available in the public domain, it can be prima facie inferred 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. Issue of deep discounting needs to be assessed in the context of exclusive agreement. Therefore, it needs to be investigated whether the alleged exclusive arrangements, deep discounting and preferential listing are being used as an exclusionary tactic to foreclose competition and are resulting in an appreciable adverse effect on competition contravening the provisions of Competition Act, 2002. In this case, the Commission, accordingly opined that there exists a prima facie case which requires an investigation by the Director General ('DG'), to determine whether the conduct of the Opposite Parties (Ops) have resulted in contravention of the provisions of Section 3(1) of the Act read with Section 3(4) thereof. In view of this case, it may be said that there are possibilities of existence of a prima facie case which requires an investigation by the Director General (DG) and accordingly, the Commission may direct Director General to cause an investigation to be made into the alleged anti-competitive practices of DownBasket and PapaGone.