India has opened an antitrust investigation into Amazon and Flipkart over allegations that the two retail firms are illegally undercutting local businesses.
The Competition Commission of India, the country's antitrust regulator, has initiated an investigation into the e-commerce businesses of Amazon and Flipkart in the country.
A New Delhi trade group alleges that Amazon and Walmart-owned Flipkart gave preferential treatment to some sellers on their platforms. According to the group, the two retail giants give big discounts and more prominent listings to those sellers, many of which they control or have a stake in.
The trade group added that the two firms also give preference to products from their in-house brands as well as signed exclusive deals with several companies, particularly smartphone makers.
According to a Flipkart spokesperson, the company was "fully compliant" with Indian laws and regulations. The spokesperson added: "We are currently reviewing the document."
Amazon has also denied the allegations and offered full cooperation with the investigation. A company spokesperson said: "We welcome the opportunity to address allegations made about Amazon; we are confident in our compliance, and will cooperate fully with CCI."
India has almost 700 million internet users and according to Morgan Stanley, the e-commerce market in the country is expected to be worth around $200 billion by 2027.
The antitrust investigation follows Walmart's layoff of 56 employees in India, including eight senior managers. Walmart argued that the layoffs were part of a review to improve efficiency, and that it continues to make investments in India.
The Confederation of All India Traders (CAIT), another large trade group representing millions of small brick-and-mortar stores across the nation, welcomed the investigation.
CAIT Secretary General Praveen Khandelwal said: "Both Amazon and Flipkart have left no stone unturned in destroying and devastating the e-commerce and retail trade market by indulging in all kinds of malpractices. Their autocratic business model has resulted in the closure of thousands of shops."
