Amazon is known as titan of commerce of twenty first century founded by Jeff
Bezos. Amazon started as a small website for online books soon became one of the
biggest retailers in world. It also offers giant e-commerce which comprises
everything virtual such as food, toys, apparel, electronics, etc.
Additionally, to e-commerce, Amazon's revenue comes from various services like
subscription, cloud computing, whole food grocery sales and other sources.
Furthermore, it also sells its own electronics namely Amazon Kindle and Amazon
Echo which are built by Amazon itself. In 2020, the overall gross merchandise
volume (GMV), together with sales by Amazon itself and by the marketplace, was
nearly $490 billion.[i]
The Competition Commission of India (CCI) in 2020
ordered a quest into alleged competition law violations by Amazon and Walmart-owned
Flipkart over allegations that the e-commerce majors promoted and gave discounts
to “preferred" sellers, entered exclusive partnerships with smartphone brands
and abused their dominant position.
Antitrust law also known as Competition law is made for the protection of trade
and commerce from unfair practices, price-fixing, bid rigging and monopolies
which was developed by US government in order to safeguard customers from unfair
practices. This law was made to ensure that the existence of competition in an
open market economy is unbiased. The Competition Act, 2002 is referred as
India's Antitrust law.
On the directions of Raghavan Committee the act was
nullified and replaced by the Monopolies and Restrictive Trade Practices Act,
1969. The antitrust law started out as being against power and making it easier
for little firms to get into the market and survive as well as to protect the
consumers. Also, the European Commission commenced an investigation in June 2015
concerning clauses in Amazon's e-book distribution agreements that probably
broken EU antitrust regulations by creating it tougher for alternative e-book
platforms to contend.
This investigation was finished in 2017 once the
Commission adopted a call that rendered binding Amazon's commitments to not
enforce these clauses. Amazon insisted that - faraway from being
anti-competitive - its private-label product was smart for purchasers and
offered a lot of selection.
Amazon India's case in CCI- Lifestyle Equities C.V. And Ors. vs Amazon Sellers
Beverley Hills Polo Club (BHPC) which is owned and distributed by Lifestyle
Equities C.V.(Licensee) and Lifestyle Licensing B.V. – Netherland based
companies filed the complaint against Amazon Seller Services, Amazon Export Sale
and Cloudtail India accusing that the alleged company has abused its dominant
position for Online Fashion Retail in Indian market. The case was dismissed by
Competition Commission of India (CCI) of abuse of dominance against Amazon.
According to the order, the Informants (BHPC) filed an information under Section
19 (1)(a) of the Competition Act, 2002 which states that the Commission may
inquire into any alleged contravention of the provisions contained in
sub-section (1) of section 3 or sub-section (1) of section 4[ii] against Amazon
Seller, Amazon Exports and Cloudtail India. Amazon Seller Services is a private
limited company which is involved in the business that deals in handling and
managing online sale website i.e. www.amazon.in and, Amazon Export Sales is
vested in USA which is a Limited Liability Corporation (LLC). The order placed
by the consumers on Amazon website are retailed by Amazon Sales. Cloudtail India
is one of the largest sellers on Amazon Online website.
The Informants (BHPC) made an accusation of unfair and anti-competitive practice
against the opposite party which results in reputational harm and caused an
impact on the visibility of their fashion products. Moreover, the Informants
made an accusation regarding abuse of dominance by Amazon Seller Service which
created unfair market conditions by putting barriers in entry to relevant
market. The Informants provided an information that the online website of Amazon
was offering counterfeit, unlicensed and unauthorized products at three times
lesser price than the original price of their brand namely, Beverley Hills Polo
Allegation of abuse of dominant position (Section-4)
Section-4(2) states that abuse of dominant position occurs when any organization
or group imposes a condition of unfairness in the price or sale and purchase of
goods and services, or imposes any restriction or limitation on the production
of goods and services, etc.[iii] There shall be an abuse of dominant position if
any organization or group involves in such practices that results in denial of
Informants accused the opposite party that they had abused its dominant position
in the market for ‘online fashion retail in India'. Further Informants stated
that the market share of both Flipkart and amazon is about 62% of the total
retail space in online, out of which Amazon covers share of 31.1% in the retail
space of online fashion. Also, it was introduced that Amazon in terms of Gross
Merchandise Value (GMV) is way ahead with gross sale of $7.5 billion in 2018
financial year while Flipkart is at $6.2 billion.
By proving this information
Informants showed that Amazon was in dominant position. Informants company
provided that they do not sell their BHPC brand fashion products on e-commerce
platform of Amazon. Also, they added that their products are only available on
their own website, licensee website or in brick-and-mortar stores. However,
presently the BHPC products are available only on their own website.
also accused the Amazon company by stating that they sell unauthorized,
counterfeit and unlicensed products of their brand Beverley Hills Polo Club (BHPC)
at three times less than the price of the original products, results in
reduction of Informants brand which gave advantage to Informant's competitors.
Allegation of Anti- Competitive Agreements (Section-3(4))
The Informants also made allegations against Amazon of vertical arrangements
with Cloudtail India under Section 3(4) of the Competition Act, 2002.
Anti-Competitive agreements are that agreements which allow fair competition
among competitors and helps to safeguard, restrict and distort competition.
Vertical agreements are the agreements between non-competition operating at
different levels of manufacturing and distribution process.[v]
claimed that the agreements between Amazon Seller Service, Amazon Export Sale
and Cloudtail India to sell unlicensed, counterfeit and unauthorised products
are anti-competitive agreements which results in hindrances for the other
competitors in entry to the market. With result to this through anti-competitive
agreements Amazon made an exclusionary effect, tie in arrangements which limits
the no. of suppliers and distorting competition.
Competition Commission of India's Decision
The CCI on the allegation of abuse of dominance noted that there is no. of
players in relevant market for services for selling fashion merchandise
provided by online platforms in India. Also, according to Red Seer report 2019
it was submitted that there are multiple players in online fashion merchandise
which consists of verticals like Myntra and Ajio and horizontals like Amazon and
Therefore, on observing the present market the CCI noted that
there is not only one platform that have dominant position in the relevant
market. Based on this statement and the information available CCI noted that the
Amazon does not have dominant position in the relevant market and dismisses the
case of abuse of dominance against Amazon Seller Services Private Limited.
Further on the Allegations of anti-competitive agreements under Section 3(4) of
the act related to exclusive arrangements by Amazon CCI noted that exclusive tie
up arrangements does not exist between fashion brand and online platforms and
there are no. of fashion brands, sellers, retailers, customers to contact each
other. Resulting to this CCI stated that there is no exclusive arrangement
between Amazon and its preferred seller namely, Cloudtail India and the case was
closed under Section 26(2) of the act.
According to the allegations of selling
of unauthorized, unlicensed and counterfeiting products at lower price the CCI
noted that as Amazon does not have dominant position therefore the issue does
not lie in anti-trust scrutiny.
CCI stated that beside the anti-trust law the issue of sale of counterfeit
products can be entertained through legal and regulatory instruments as it has
adverse implication on sellers and buyers. The competition Commission of India
concluded the case by stating that the no case is made out against the Amazon
based on given facts and circumstances.
In the last half decade, which was further augmented due to the COVID -19
Pandemic, Amazon has grown exponentially in India thereby increasing the
reliance of urban India on the conglomerate. Everything, from OnePlus mobile
phones to Netflix, has a direct or indirect relationship with Amazon.com LLC and
all its affiliates. A prima facie overview would even lead a layman to believe
that Amazon does have an adverse effect on competition in India.
This theory is
supported by the fact that there are numerous complaints against Amazon in the
Competition Commission of India from the small-scale vendors of Maharashtra to
mobile phone sellers of Delhi. But due to tactical genius and business acumen of
those heading Amazon, most of those complaints don't stick and the Commission
lets them go scot free.
While there is a prevalent problem of e-commerce
businesses taking up a significant market share, the case of Amazon is a global
one as similar complaint are filed in applicable courts/ forums in all
jurisdictions across the world where Amazon operates – Brazil, United Kingdom,
Australia, United States of America. This begs the question – When exactly will
Amazon start having appreciable adverse effect on competition in the global
Written By: Parul Garg,
- Amazon GMV in 2020, available at: https://www.marketplacepulse.com/articles/amazon-gmv-in-2020 (Last
Modified February 03, 2021)
- Section 19(1) Competition Act, 2002, Act No. 12 of 2003 (India).
- Competition Act, 2002, Act No. 12 of 2003 (India).
- Section 4 (2)(c) Competition Act 2002, Act No.12 of 2003(India).
- Section 3 (4) Competition Act 2002, Act No.12 of 2003(India).
- Online Fashion Market Updates, available at: https://redseer.com/newsletters/online-fashion-market-updates-june18 (Visited
on March 09,2021)
B.Com.LLB(H), Year- 3rd - Amity Law School, Noida