In a significant setback for e-commerce giants Amazon and Flipkart, antitrust investigations conducted by the Competition Commission of India (CCI) have found that both companies violated local competition laws. The CCI reports indicate that Amazon and Flipkart gave preference to select sellers, prioritized certain listings, and offered steep discounts, causing harm to other companies in the market.

A key finding in the CCI's 1,027-page report on Amazon revealed that smartphone companies, including Samsung, Xiaomi, Motorola, Realme, and OnePlus, colluded with the e-commerce giant to exclusively launch their products on its Indian website, thus breaching antitrust laws. Similarly, the CCI's report on Flipkart found that the Indian units of Samsung, Xiaomi, Motorola, Vivo, Lenovo, and Realme engaged in similar practices.

The inclusion of smartphone manufacturers like Samsung and Xiaomi in the investigation could potentially lead to legal and compliance challenges for these companies. The CCI emphasized that exclusivity in business goes against fair competition and the interests of consumers.

According to Counterpoint Research data, Samsung and Xiaomi together hold almost 36% of India's smartphone market share, with Vivo holding 19%. India's e-retail market is projected to exceed $160 billion by 2028, up from $57-60 billion in 2023, making it a crucial growth market for Amazon and Flipkart.

Notably, the CCI reports reveal that Amazon and Flipkart deliberately downplayed allegations of exclusive launches during the investigations, despite such practices being rampant. Additionally, the reports highlight that both companies utilized their foreign investments to provide subsidized rates for services like warehousing and marketing to a select group of sellers.

As a result of the investigation's findings, the CCI has ordered smartphone companies, including Xiaomi, Samsung, OnePlus, Realme, and Motorola, to submit their financial statements for the next three fiscal years, certified by their auditors, to assess any potential penalties.

These findings have emerged from a complaint launched by an affiliate of the Confederation of All India Traders, the country's largest retailer association with 80 million members, prompting the CCI to initiate the investigation in 2020.

In the coming weeks, the CCI will review objections raised by Amazon, Flipkart, the retailer association, and the implicated smartphone companies. If upheld, fines may be imposed, and companies may be required to alter their business practices accordingly.

The allegations of exclusive phone launches online have long been a bone of contention for Indian retailers who argue that brick-and-mortar stores suffered as customers sought the latest models on e-commerce platforms. The CCI reports cite analyses of smartphone company data, which corroborated the negative impact of exclusive launches on ordinary sellers and traditional retailers.

With an estimated 50% of phone sales occurring online last year, up from 14.5% in 2013, platforms like Flipkart held a 55% share in online phone sales in 2023, followed by Amazon with 35%, according to Indian research firm Datum Intelligence.

The findings of the investigations pose significant challenges for Amazon and Flipkart in a key growth market, where they have faced criticism from small retailers for years for disrupting their offline businesses. The CCI's examination of the violations and subsequent potential penalties serve as a reminder to e-commerce giants to operate within the boundaries of fair competition and prioritize the interests of all market participants.