The Government has assured Parliament that it is actively monitoring the impact of e-commerce and quick commerce platforms on small retailers and traditional kirana stores, emphasizing measures to ensure a level playing field in the sector.
In a written response to a Lok Sabha question, Minister of State for Commerce and Industry, Jitin Prasada, highlighted the government’s focus on protecting small businesses from anti-competitive practices, including predatory pricing and exclusive supplier tie-ups.
Regulatory Framework in Place
The Minister detailed that the e-commerce sector operates under a robust legislative framework, citing key regulations such as the Competition Act, Consumer Protection Act, Foreign Exchange Management Act, Consumer Protection (E- commerce) Rules, Information Technology Act, 2000, Payment and Settlement Systems Act, 2007 and Foreign Direct Investment (FDI) Policy. He underlined the government’s commitment to addressing unfair practices by leveraging these laws and promoting initiatives like the Open Network for Digital Commerce (ONDC), which democratizes digital commerce for small and medium businesses.
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“ONDC makes e-Commerce more inclusive wherein small and medium-sized businesses can use any ONDC compatible applications instead of being governed by specific platform centric policies. This provides multiple options to them to be discoverable over network and conduct business. It also encourages easy adoption of digital means by the small retailers and traditional kirana stores, who may be currently not on digital commerce networks”, Prasada said.
E-Commerce Under Watch
Responding to allegations of predatory pricing and exclusive tie-ups by large e-commerce firms, Prasada confirmed that the Director General of Investigations at the Competition Commission of India (CCI) is probing complaints against these entities. The complaints have raised concerns about unfair price advantages and bulk purchasing power that threaten the survival of smaller retailers.
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The probe comes amidst increasing scrutiny of quick commerce giants like Blinkit, Zepto, and Swiggy’s Instamart, which have been accused of selling products at steep discounts, disrupting the traditional retail ecosystem.
Industry experts have noted parallels with past cases, such as Reliance Jio’s market entry in telecom, where similar predatory pricing allegations were dismissed due to a lack of market dominance. “Predatory pricing provisions under the Competition Act apply only when dominance is established. In this evolving quick commerce market which is hyper-competitive with multiple players, no single player currently holds significant market power,” said a competition law expert.
Retailers Seek Fair Treatment
Traditional retail bodies, such as the All India Consumer Products Distributors’ Federation (AICPDF), have expressed dissatisfaction, claiming that quick commerce firms’ practices are creating an uneven playing field. AICPDF President Dhairyashil Patil recently reiterated calls for a review of these platforms’ operational models, particularly the use of “dark stores” and inventory control mechanisms.
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“These practices, coupled with foreign ownership concerns, warrant a comprehensive review to safeguard small retailers and ensure fair competition,” Patil stated. However, experts argue that foreign funding concerns fall outside the purview of the CCI and require policy-level intervention.
The outcome of the CCI investigation will be crucial in determining the future of competition dynamics in the quick commerce sector. With the industry expected to grow further, balancing innovation with fairness will remain a key challenge.
As regulatory scrutiny intensifies, the government’s commitment to protecting small retailers while fostering digital innovation will be critical in shaping the e-commerce and quick commerce landscape, said economy watchers.
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Published on December 18, 2024
https://www.thehindubusinessline.com/news/govt-allays-concerns-of-retailers-on-predatory-pricing-by-quick-commerce-giants/article68998806.ece
