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IAMAI hails CCI order to close investigation against e-commerce

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MUMBAI: The Internet and Mobile Association of India (IAMAI) has welcomed the Competition Commission of India's (CCI) decision to quash charges of cartelization and anti-competition practices by e-commerce companies.

IAMAI hopes that this will finally put a stop to motivated charges brought up regularly by certain interested groups against e-commerce companies. IAMAI is of the view that this order will allow e-commerce companies to continue to provide innovative services to consumers in a free and fair manner.

In recent months, charges have been brought by various malcontent elements that discount sales launched by numerous e-commerce websites were anti-competitive in nature. It was also alleged that e-commerce websites and online product sellers entered into exclusive agreements, thereby leading to market dominance.

The CCI has ruled that e-commerce companies did not violate competition norms by indulging in cartelization or by abusing their dominant position. “The Commission is of the prima facie view that no case of contravention of the provisions of either section 3 or section 4 of the Act is made out against the opposite parties,” it said in its order.

With regard to exclusive agreements, the CCI said that such pacts need not result in appreciable adverse effect on competition. “It does not seem that such arrangements create any entry barrier for new entrants. It seems very unlikely that an exclusive arrangement between a manufacturer and an e-portal will create any entry barrier as most of the products which are illustrated in the information to be sold through exclusive e-partners face competitive constraints,” the order stated.

In fact, the CCI order praises the e-commerce companies by observing that online distribution channel provide an opportunity to the consumers to compare the prices as well as the pros and cons of the product. Furthermore, through the option of delivery right at their door steps, consumers have the opportunity to accept the purchase at their convenience and do not need to set aside a couple of hours at a stretch to make the purchase through a brick-and-mortar retail outlet. Therefore, at this stage, it does not appear that the exclusive arrangement between manufacturers and e-commerce/portal companies lead to Appreciable adverse effect on competition (AAEC) in the market.

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