Amazon, Flipkart in legal soup

Amazon, Flipkart in legal soup


The Jodhpur bench of the Rajasthan High Court has issued notices to the e-commerce platforms Amazon and Flipkart following the writ petition filed by the Confederation of All India Traders (CAIT) for alleged violation of the FDI policy.

'The court has set October 15 for hearing the case before which Amazon and Flipkart have to reply to the notice,' CAIT’s Secretary General, Mr.  Praveen Khandelwal said.

The CAIT stressed upon the 'repeated violations of the FDI policy by Amazon and Flipkart since years,' by engaging in deep discounting, predatory pricing, loss funding and controlling the inventory, it said.

Mr.  Khandelwal said that by doing so these portals have converted their marketplace model of doing business into inventory based model that violates FDI policy. 'Amazon and Flipkart don’t own the inventory on their platforms so can they give discounts because the goods belong to the sellers,' said Mr. Khandelwal adding that so far no action has been taken against them.

The Government has allowed FDI only in B2B e-commerce and had said in 2016 Press Note that an e-commerce marketplace will not, directly or indirectly, influence the sale price of goods or services, 'which also renders such business as an inventory-based model,' DPIIT had said earlier this year in a statement.

Nonetheless, there have been complaints about the flouting of norms by influencing the price of products and indirectly engaging in the inventory-based model. 'An e-commerce platform operating an inventory-based model does not only violate the FDI policy on e-commerce but also circumvents the FDI policy restrictions on multi-brand retail trading,' the department said.

The Commerce Minister, Mr.  Piyush Goyal had in June said the government was committed to protecting small traders from predatory behaviour by foreign-funded companies.