CCI urges ecommerce platforms to be transparent
CCI chairman Ashok Kumar Gupta said discounting, including selling below cost, is used by businesses to create a market. “Below cost doesn’t necessarily mean predatory pricing. However, we then have to ascertain whether they have become large enou...
CCI chairman Ashok Kumar Gupta told ET that the regulator is separately considering whether ecommerce platforms have become large enough to be restrained from using deep discounting practices, which are available to new entrants. “The advisory will be more to do with transparency (with sellers and partners). Can they be more forthright? Can ecommerce players share in what manner they are, for example, rating various restaurants and the kind of feedback they get?”
Referring to complaints by restaurants that online food delivery platforms had unilaterally revised commissions charged for deliveries, Gupta said: “Just because they have market power to review doesn’t mean they should do it unilaterally. It should be through a consultative process.” However, he made it clear the proposed advisory would be limited to transparent functioning and won’t cover the issue of deep discounting raised by small retailers and restaurants.
CCI is conducting a market study of the ecommerce sector and has published interim findings, which showed that retailers, restaurants and hotel partners were primarily concerned about the algorithms that ecommerce platforms used to rate sellers, suspecting that they favoured their own brands.
Representatives of the Confederation of All India Traders had met with the CCI chairman to raise their concerns over alleged ‘unethical commercial practices’ by ecommerce platforms.
However, Gupta said discounting, including selling below cost, is used by businesses to create a market. “Below cost doesn’t necessarily mean predatory pricing. However, we then have to ascertain whether they have become large enough and should they continue with deep discounting?” he said.
Gupta said in antitrust cases, he expected a regime in the works to allow “commitment and settlement” would enable faster resolution. The mechanisms will not, however, apply to cartels. “These mechanisms will enable swifter resolution outside an otherwise lengthy enforcement process and allow for market corrections to happen faster,” Gupta said, adding that a protracted implementation of CCI orders could dilute impact.
CCI will consider experience of other mature jurisdictions while creating commitment and settlement mechanisms, Gupta said. He said the commitment mechanism, which allows parties to rectify their behaviour before an investigation by the CCI, will likely come into force soon. The settlement mechanism will follow.
“Penalties are a means and not an end in themselves in any enforcement process… In numerous cases, the parties rectify their anti-competitive behaviour during the enquiry process itself so the market correction as such has taken place,” said Gupta.