INDIA's Competition Commission has accused Samsung, Xiaomi, and other smartphone manufacturers of collaborating with Amazon and Walmart's Flipkart to launch products exclusively on their platforms, violating local antitrust laws.
Regulatory reports, seen by Reuters, indicate that the companies breached competition rules by favouring select sellers, prioritising certain listings, and offering steep discounts, to the detriment of other businesses.
The investigation, carried out by the Competition Commission of India (CCI), resulted in a 1,027-page report concerning Amazon and a 1,696-page report about Flipkart. The reports highlight that Indian units of companies such as Samsung, Xiaomi, Motorola, Realme, and OnePlus were involved in exclusive product launches in collusion with the e-commerce platforms, which violates competition regulations.
According to the reports, such practices could increase legal challenges for the smartphone manufacturers. GV Siva Prasad, additional director general of the CCI, stated in the report that "Exclusivity in business is anathema. Not only is it against free and fair competition but also against the interest of consumers."
Reuters was the first to report on these findings, which date back to August 9 but have not been made public. While Xiaomi declined to comment, other smartphone companies, as well as Amazon, Flipkart, and the CCI, have not responded to requests for comments.
Both reports found that during investigations, Amazon and Flipkart downplayed allegations of exclusive launches. However, officials observed that such practices were widespread. Data from Counterpoint Research shows that Samsung and Xiaomi hold a combined 36 per cent share of India's smartphone market, with Vivo having 19 per cent.
The findings could pose a significant setback for Amazon and Flipkart, as India's e-commerce market is projected to reach £122 billion by 2028, up from £43-46 billion in 2023, according to Bain consultancy.
Additionally, the CCI noted that both Amazon and Flipkart used their foreign investments to offer subsidised services like warehousing and marketing to select sellers, disadvantaging others.
Some smartphone companies, including Xiaomi, Samsung, OnePlus, Realme, and Motorola, have been instructed to submit their financial statements to the CCI for the fiscal years up to 2024. These statements must be certified by an auditor, according to an internal CCI document dated August 28.
The investigation was initiated in 2020 following a complaint from an affiliate of the Confederation of All India Traders, which represents 80 million members. The CCI is expected to review objections from the involved parties, including Amazon, Flipkart, and the smartphone manufacturers, in the coming weeks. This may result in fines and changes to their business practices.
Indian retailers have frequently accused these platforms of launching phones exclusively online, causing traditional retailers to lose out. According to both CCI reports, exclusive launches have hurt both ordinary sellers and brick-and-mortar retailers, who received the latest models later than online platforms.
Data from Datum Intelligence suggests that 50 per cent of phone sales in India took place online last year, a significant increase from 14.5 per cent in 2013. Flipkart accounted for 55 per cent of online phone sales in 2023, while Amazon held 35 per cent.
(Reuters)
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