The government of India will lay down competition related guidelines for e-commerce firms like Flipkart, Amazon, Swiggy, Zomato and others across segments wherein market share, merger & acquisition and cross-holding caps will be fixed.
According to sources involved in the drafting of regulations towards this end, the thinking in the government is that intermediaries should be categorised in terms of their characteristics. For instance, social media, as an intermediary, has a different characteristic and different impact on a consumer, than e-commerce and digital media, so all these should not be seen through one lens but through multiple streams of regulation.
Competition related regulations for e-commerce firms, would ensure that monopoly and duopoly do not emerge and there’s fair competition.
“Today there’s lot of ad-hocism. Some aggrieved party approaches Competition Commission of India and the anti-trust regulator then decides whether the practices against which complaint has been made is anti-competitive or not. All this will change once the guidelines are put in place,”
For instance, currently the CCI is conducting an inquiry into the allegations of predatory pricing, deep discounting, preferential seller listing and exclusive partnerships against Flipkart and Amazon. The two firms had approached the Karnataka high court and subsequently the Supreme Court to restrain the CCI from going ahead with such an enquiry but did not get any relief.
“The inquiry may or may not show them as guilty but in either case standards norms would be missing by which these firms need to abide, hence fixing regulatory norms is a must,”
The guidelines will look into aspects like merger & acquisitions between two e-commerce firms in the same space, how much market share can such a merged entity have, what kind of cross-holdings can there be between two or more players.
The draft is still at the drafting stage. A public consultation will be done to seek stakeholders comment before the government proceeds to finalise such guidelines.
Currently, the Information Technology Rules regulate only social media platforms like Twitter, Facebook*, Instagram* etc. There are also regulatory guidelines for over-the-top players like Netflix, Amazon Prime Video etc. These are intermediaries which are in sphere of information and entertainment.
Sources said that such competition-related guidelines relating to market share caps and cross-holding norms are in place and applies to telecom service providers, so while finalising the rules for e-commerce firms, these may be referred to.
* banned and designated as extremist in Russia
Source: Financial Express