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Govt looks to bring e-commerce companies under competition laws

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The government is considering bringing e-commerce companies under the ambit of consumer protection and competition laws in an attempt to safeguard consumer interest and prohibit predatory pricing.
Commerce and industry minister Nirmala Sitharaman discussed these and other issues related to e-commerce and so-called multi-brand retailing with state industry ministers on Wednesday.
The meeting was part of the stakeholders’ consultation triggered by the order from the Delhi high court to the government asking to consider a representation by the Retailers Association of India (RAI).
The industry lobby moved the high court in May seeking parity between online and offline retailers. RAI alleged that e-commerce companies were calling themselves marketplaces while still engaging in retail activity. India doesn’t allow foreign direct investment in online retailing but allows it in marketplaces. Sitharaman has also met banks, officials from other ministries, and executives from both brick-and-mortar and online retailers and marketplaces as part of this process.
The focus of Wednesday’s meeting was to ensure offline and online retailers (and marketplaces) were treated the same way so as to not give an unfair advantage to either.
Arvind Singhal, chairman of retail consultancy Technopak Advisors, said most of the regulations being discussed need a commonsense approach rather than consultations.
“Any business dealing with consumers directly need to be brought under consumer protection act and if there are any anti-competitive practice, they should face the CCI (Competition Commission of India). Government should move with time and abolish any distinction between physical and digital retailers,” he said.
With the increasing penetration of the Internet and smartphones, online vendors such as Flipkart, Snapdeal and Amazon have eaten into the market share of brick-and-mortar retailers with aggressive promotions and discounted sales.
“There was consensus that there should be standardisation of packaging and labelling—name and address of the original sellers should be displayed over the package,” a government official present in the meeting said.
The petition by RAI, while seeking a level playing field, cited several instances of large e-commerce companies such as Amazon and Flipkart creating alternative routes and structures to attract foreign capital.
Currently, the government allows 100% foreign direct investment (FDI) only in business-to-business e-commerce but not in retail e-commerce. However, brick-and-mortar retailers allege that current big online retailers flout existing norms and engage in retail activities even while claiming to be marketplaces.
While most e-commerce players follow a marketplace model, claiming to be only platforms for buying and selling of goods, there is no legal definition of marketplace issued by the Indian government, creating a policy grey area.
As for offline retail, in 2012, the United Progressive Alliance government allowed foreign investors to hold up to 51% in multi-brand outlets (supermarkets and the like) in India.
The National Democratic Alliance government has kept the policy in abeyance as its key constituent Bharatiya Janata Party is opposed to the idea. However, the 2012 decision has not been reversed.
Many states, including some Bharatiya Janata party-ruled ones such as Rajasthan and Madhya Pradesh, said that they were in favour of providing a level-playing field to both e-commerce and multi-brand retailers and supported allowing FDI in both the sectors, according to people present at Wednesday’s meeting. Only Tamil Nadu opposed FDI in multi-brand retail.
“Based on the inputs of the state governments, we will work on some sort of guidelines for retail and wholesale e-commerce as well as FDI in e-commerce. But we are not sure that we will resolve all existing concerns,” a second government official present in the meeting said. States have been given 15 days to hold wider consultation and communicate their position in writing.
Haryana industry minister Captain Abhimanyu said there was general consensus that FDI in retail is in the interest of the country, but that the interests of the consumer, small retailers and small manufacturers should not be compromised. “We will provide inputs after holding consultation with stakeholders including small retailers, small enterprises and dairy farmers. We expect the centre to provide details on what happened in different countries where similar experiments were done. Were they really helpful to the local economies of the country? We can’t take such decisions on the basis of ideology. We have to take a pragmatic view,” he added.
Several states have also said there is a lack of clarity on taxing e-tailers and marketplaces.
Some of the states present in the meeting said the goods and services tax (when it is implemented) would take care of the current confusion. Others demanded amendments in the current tax laws till the time GST is implemented, the second government official added.
HT Mint, New Delhi, 16th July 2015

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