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Centre probing predatory pricing complaints in e-commerce

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Commerce Minister Piyush Goyal

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New Delhi: The Department for Promotion of Industry and Internal Trade (DPIIT) under the Commerce Ministry is examining complaints alleging predatory pricing and excessive discounts on e-commerce platforms, Parliament was informed on Thursday.

"Representations have been received in this Department alleging that some e-commerce platforms are engaged in predatory pricing and are providing excessive discounts," Commerce Minister Piyush Goyal told the Lok Sabha in a written reply.

"The extant Foreign Direct Investment (FDI) policy on e-commerce sector, inter-alia, specifies that e-commerce marketplaces will not directly or indirectly influence the sale price of goods or services and shall maintain a level playing field. These representations are under examination," he said.

Goyal also said that e-commerce companies having foreign investment can operate only a marketplace model and there are restrictions on the inventory based model of e-commerce.

He noted that services should be provided by the e-commerce marketplace entity, or other entities in which the e-commerce entity has direct or indirect equity participation or common control, to vendors on the platform at arm's length and in a fair and non-discriminatory manner.

"Such services will include but not limited to fulfilment, logistics, warehousing, advertisement/marketing, payments, financing, among others," he said.

Cash back provided by group companies of the marketplace entity to buyers shall be fair and non-discriminatory, he added.

According to Goyal, for the purposes of this clause, provision of services to any vendor on such terms which are not made available to other vendors in similar circumstances will be deemed unfair and discriminatory. Moreoever, if any violation is reported necessary action may be taken by the competent authority.

The Competition Commission of India had in January ordered an enquiry into the operations of both Amazon and Flipkart on multiple counts, including deep discounts and exclusive tie-ups with preferred sellers.

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