The e-commerce companies with foreign investments such as Amazon.com and Walmart owned Flipkart will not be able to sell the products of companies which they have an equity interest.
In a circular issued by the government on Wednesday stated that, the new rules are to prevent the predatory pricing and random discounts. The circular also states that the companies will be restricted from entering into exclusive agreements with the sellers.
The new rules which will be applicable from February 1 makes clear that “An entity having equity participation by e-commerce marketplace entity or its group companies, or having control on its inventory by e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such marketplace entity.”
The new norms were introduced following the complaints from Indian retailers and traders. The All India Online Vendors Association (AIOVA) filed a complaint with anti-trust body Competition Commission of India (CCI) on October. The petition filed by the AIOVA alleges that the Amazon favours the traders which it partly owns and similar petition is filed against Flipkart alleging the violation of competiton rules through special treatment for select sellers.
The circular says, “E-commerce marketplace entity will not mandate any seller to sell any product exclusively on its platform only.” The Confederation All India Traders says that if the new norms are exercised fully then malpractices, indiscriminate discounts and predatory pricing schemes will be stopped.