Retailers’ allegation of anti-competitive behavior against quick commerce companies like Blinkit, Zepto, and Swiggy Instamart may not result in anti-trust action against the latter, as these firms don’t meet the requirement of having dominant position in the relevant market, experts say.
In a letter dated October 18, the All India Consumer Products Distributors Federation (AICPDF) complained to the Competition Commission of India (CCI) that these quick commerce companies are engaged in “predatory pricing, deep discounting, and monopolistic conduct” which it said threaten the existence of traditional Indian retailers.
Former CCI head Vinod Dhall l said that the complaint said: “The issues of predatory pricing and deep discounting would fall under the section 4 of the Competition Act which talks about the “abuse of dominant position”. But until the dominance is not proved, there’s no case.”
As per research firm Datum Intelligence, no single company has a dominant position in the retail market now. In the quick commerce segment, Blinkit commands a market share of 40% followed by around 30% each for Swiggy and Zepto.
A competition lawyer said that the complaints, however, have to be looked at from the point of view of consumer convenience. “The consumer interest is an important part of the law. The low pricing of products and services is not a violation per se. If a company is doing deep discounting to get more customers, that’s not a violation,” he said.
Meanwhile, experts said that after receiving the complaint, CCI will have to conduct an inquiry into the affairs of the enterprise to determine whether such enterprises are abusing their dominant position by engaging in predatory pricing.
“In its inquiry, CCI will assess whether these quick commerce enterprises hold a dominant position in the market and whether their pricing strategies are intended to eliminate competition. Factors such as market share, economic power, and entry barriers will be crucial in this determination. If the CCI finds that these companies are abusing their dominant position, it can impose penalties which will not be more than 10% of the average turnover or income for the last three financial years,” said Kunal Sharma, partner at Singhania & Co.
Earlier, the AICPDF had filed a complaint with the commerce ministry and the department for promotion of industry and internal trade (DPIIT) against quick commerce platforms. Last month, the DPIIT referred the complaint to CCI.
Besides anti-competitive conduct, the AICPDF has raised serious concerns about the operational models of these platforms violates India’s foreign direct investment (FDI) regulations. “It appears that some quick commerce platforms are employing “dark stores” – centralised warehouses controlled directly by the platform – to blur the lines between marketplace and inventory-based models, potentially violating FDI regulations that prohibit marketplace entities from holding or controlling inventory,” the retailers’ body said.
From: financialexpress
Financial News
