Bargaining power imbalance and information asymmetry between marketplace platforms and their business users are holding back the e-commerce sector in India. The Competition Commission of India (CCI) came to this conclusion in its report Market Study on E-commerce in India: Key Findings and Observations that was released on January 8.
But, even without a formal determination of violation of competition law, the CCI remarked, "improving transparency over certain areas of the platforms’ functioning can reduce information asymmetry and have a positive influence on competition outcomes."
In fact, all the recommendations listed by the CCI in response to the findings of the study initiated by the commission in April 2019 a view to better understand the functioning of e-commerce in India and its implications for markets and competition were about transparency. The commission has advocated self-regulation by e-commerce marketplace platforms, even as demands have been rising over the need for a regulatory body for the e-commerce sector in the country.
The study found a number of issues that, directly or indirectly, have a bearing on competition, or may hinder realisation of the full pro-competitive potential of e-commerce. "These include the issues of lack of platform neutrality, unfair platform-to-business contract terms, exclusive contracts between online marketplace platforms and sellers / service providers, platform price parity restrictions and deep discounts," the commission observed.
The findings corroborate allegations made by many stakeholders, including small-time traders, about the predatory and unfair practices being followed by big-time e-commerce players in the country.
The recommendations made by the CCI are also in tune with the Consumer Protection (e-Commerce) Rules, 2019 issued by the Union ministry of consumer affairs in November last year. The Rules had called for more fairplay on part of e-commerce platforms and made it incumbent on sellers to be transparent in displaying on online platforms all information ranging from delivery / shipment to returns and grievance redressal mechanisms.
Meanwhile, the National E-commerce Policy, a draft of which was released in February 2019, has been in the works for a while. It is likely to be in line with the CCI findings.
