Customers shop at a Samsung mobile phone store in a shopping mall in New Delhi.
Reuters | Anindito Mukherjee
Regulatory reports seen by Reuters show that Samsung, Xiaomi and other smartphone companies colluded with Amazon and Walmart’s Flipkart to launch products exclusively on the e-commerce companies’ Indian websites, violating antitrust laws.
An antitrust investigation by the Competition Commission of India (CCI) found that Amazon and Flipkart violated local competition laws by favoring specific sellers, prioritizing certain goods and heavily discounting products to the detriment of other companies, Reuters reported this week. interests.
The CCI’s 1,027-page report on Amazon also said that the Indian subsidiaries of five companies, including Samsung, Xiaomi, Motorola, Realme and OnePlus, “colluded” with Amazon and its affiliates and “engaged in the practice of exclusive” phone launches that undermined competition law.
In Flipkart’s case, a 1,696-page CCI report said similar practices were adopted by Indian subsidiaries such as Samsung, Xiaomi, Motorola, Vivo, Lenovo and Realme.
Including smartphone manufacturers such as Samsung and Xiaomi in the case could increase their legal and compliance problems.
GV Siva Prasad, additional director general of the CCI, wrote in the Amazon and Flipkart report, “Exclusivity in business is abhorrent. It is not only against free and fair competition but is also detrimental to the interest of consumers.”
Reuters first reported on accusations of anti-competitive behavior by smartphone companies in a private CCI report on August 9.
Xiaomi declined to comment, and other smartphone makers did not respond to requests for comment.
Amazon, Flipkart and CCI have not responded and are yet to comment on the report’s findings.
Both CCI reports said Amazon and Flipkart “deliberately downplayed” allegations of exclusivity during the investigation, but officials found the practice “rampant”.
Counterpoint Research data shows that South Korea’s Samsung and China’s Xiaomi are the two largest smartphone manufacturers in India, accounting for nearly 36% of the market share, and China’s Vivo accounts for 19%.
Consulting firm Bain estimates that India’s e-retail market will exceed $160 billion by 2028, up from $57-60 billion in 2023.
The findings are a major setback for Amazon and Flipkart in a key growth market, where they have faced the wrath of smaller retailers for years for hurting their offline business.
The CCI also said the companies used their foreign investments to provide subsidized rates for services such as warehousing and marketing to a specific number of sellers.
Online sales boom
According to an internal CCI document on August 28, some smartphone companies including Xiaomi, Samsung, OnePlus, Realme and Motorola have been ordered to submit auditor-certified financial statements to the CCI for the three fiscal years ending in 2024. , also seen by Reuters.
The investigation into Amazon, Flipkart and their sellers was triggered in 2020 by complaints from an affiliate of the All India Traders Federation, India’s largest retail association with 80 million members.
The CCI will review any objections raised by Amazon, Flipkart, retailers associations and smartphone companies to its findings in the coming weeks and may impose fines and ask the companies to change their business practices, people familiar with the matter said.
Indian retailers have repeatedly accused Amazon, Flipkart and smartphone companies of launching phones exclusively online, saying store owners suffered losses due to lack of access to the latest models while customers sought them out on shopping sites.
Both CCI reports quoted data analysis from smartphone companies saying: “Exclusive sales have seriously affected not only regular sellers on the platform, but also brick-and-mortar retailers who acquired the phones later.”
Indian research firm Datum Intelligence estimates that 50% of mobile phone sales came online last year, up from 14.5% in 2013.
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