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TMI Blog2018 (11) TMI 1932X X X X Extracts X X X X X X X X Extracts X X X X ..... ase may be defined as Services provided by online marketplace platforms for selling goods in India . Issue of dominance - HELD THAT:- Flipkart India is not dominant in the relevant market of Services provided by online marketplace platforms for selling goods in India ; therefore, the issue of abuse of dominant position does not arise. The Commission, however, deems it appropriate to take on record the submissions made by Flipkart denying abusive conduct by its entities. In regards to Flipkart India, it has been submitted by Flipkart that the arrangements of Flipkart India with its B2B customers are neither exclusive nor do they impose any restraints on any reseller who chooses to sell their products on the Flipkart platform. Further, Flipkart India does not impose any exclusivity requirements on its B2B customers with respect to either procuring the products from Flipkart India or with respect to reselling these products to any third parties, or selling on/ through the Flipkart marketplace. The option of dealing with Flipkart India is available to any vendor. There is no restriction on any entity desirous of dealing with Flipkart India as a B2B customer. Further, the B2B cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with big vendors , dated 07.04.2018, the Informant has stated that small vendors have become allies of the big vendors and suppliers to leading sellers such as Cloudtail, WS Retail etc. on the Flipkart and Amazon platforms, rather than selling directly to consumers through the online ecommerce marketplace sites. 6. The Informant stated that OP-1 sells goods to companies like WS Retail Services Private Limited, which was owned by founders of OP-2 till 2012, at a discounted price and thereafter, these are sold on the platform operated by OP-2. The Informant further stated that such practices amounted to preferential treatment to certain sellers. Further, it was apprehended that unfair trade practices are being carried and corporate veil on it is required to be lifted to assess the economic nexus and the wrongdoings being committed. The Informant averred that OPs have a direct conflict of interest with other manufacturers selling on their platform and their own brands like Smartbuy and Billion . 7. Based on the above averments and allegations, the present information has been filed by the Informant against the Opposite Parties alleging contravention of the provisions of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dominant position in the said market, as detailed in the succeeding paragraphs. 11. Referring to an order dated 25.04.2018 passed by the Hon ble Income Tax Appellate Tribunal in the case of Flipkart India Private Limited v. Assistant Commissioner of Income Tax, ITA No. 202/Bang/2018 (Asst. Year : 2015-16), it is alleged that the strategy of OP-1 was to acquire goods from various persons and to immediately sell the same to WS Retail Services Private Limited at a discount which would, in turn, sell such goods as sellers on the internet platform of OP-2 i.e. Flipkart.com. Such conduct of OP-2 was alleged to be in contravention of Section 4 (2) (a) of the Act. It was also pointed out that OPs are able to sell goods at discounted price as they have access to Venture Capital ( VC ) funds and are financially backed by big investors. 12. It is further alleged that such acts of OPs of selling goods below cost price also result in denial of market access to the individual sellers who are not backed by VC funds and investors and thereby such acts also contravene the provisions of Section 4 (2) (c) of the Act. 13. Lastly, it is alleged that OP-2 is using its dominance in the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Information reveals that the Informant has essentially made allegations against Flipkart Internet/ OP-2. It is alleged in the information that OP-2, which operates the Flipkart marketplace for selling of goods online in India, has abused its dominant position in the said market by facilitating discounts and by further leveraging its position to enter into another market of manufacturing products through private labels. In this connection, the Informant alluded to the role of OP-1 by pointing out that the strategy of OP-1 was to acquire goods from various persons and to immediately sell the same to WS Retail Services Private Limited at a discount which would, in turn, sell such goods as sellers on the internet platform Flipkart.com of OP-2. 19. Thus, it is evident that there is no need to define two relevant markets as urged by the counsel appearing on behalf of Flipkart and the impugned conduct can be examined with reference to delineation of one relevant market alone which is relatable to OP-2. 20. At this stage, it is observed that Flipkart Internet (OP-2) operates a marketplace-based e-commerce platform, which facilitates trade between end-customers and third party se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as even if the market is confined to online space, the present market construct, as detailed later, would not indicate any player with such a market power so as to confer a dominant position upon it. 24. However, at this stage, it may be appropriate to note that there is a difference between online retail store and online marketplace platform. In online retail store, a particular seller, who may or may not own a brick and mortar retail store, owns his portal to sell products thorough online website. Whereas in an online marketplace platform such as Amazon or Flipkart, the owner of the online portal offers a platform for buyers and sellers to transact. Hence, the sellers would be interested in selling on the platforms when increasingly high number of buyers visit an online platform, thus characterising the online platforms with network effects. In the case of online retail stores, there are hardly any network effects though there may be efficiencies of scale. Further, as per the Guidelines for Foreign Direct Investment (FDI) on E-commerce issued by Department of Industrial Policy Promotion, Ministry of Commerce Industry, Government of India, FDI is not permitted in inventory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake on record the submissions made by Flipkart denying abusive conduct by its entities. In regards to Flipkart India, it has been submitted by Flipkart that the arrangements of Flipkart India with its B2B customers are neither exclusive nor do they impose any restraints on any reseller who chooses to sell their products on the Flipkart platform. Further, Flipkart India does not impose any exclusivity requirements on its B2B customers with respect to either procuring the products from Flipkart India or with respect to reselling these products to any third parties, or selling on/ through the Flipkart marketplace. The option of dealing with Flipkart India is available to any vendor. There is no restriction on any entity desirous of dealing with Flipkart India as a B2B customer. Further, the B2B customers are independent third party vendors with whom Flipkart India has arm s length arrangement. 31. The Commission also observes that so far as the issue of preferential treatment given by OP-1 to exclusive seller (WS Retail Services Private Limited) which is stated to be owned by OP-2, suffice to point out that the Informant itself has admitted in the Information of such structural lin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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