Competitors pointers for e-commerce companies within the offing: Market share, cross-holding caps could also be mounted

The government will lay down competition related guidelines for e-commerce firms like Flipkart, Amazon, Swiggy, Zomato and others across segments in which market share, merger & acquisition and cross-holding caps will be fixed.

According to sources involved in the drafting of regulations towards this end, the thinking in the government is that intermediaries should be categorized in terms of their characteristics. For instance, social media, as an intermediary, has a different characteristic and different impact on a consumer than e-commerce and digital media, so all these should not be seen through one lens but through multiple streams of regulation.

Competition related regulations for e-commerce firms would ensure that monopoly and duopoly do not emerge and there’s fair competition. “Today there’s a lot of ad hocism. Some aggrieved party approaches Competition Commission of India and the anti-trust regulator then decides whether the practices against which complaint has been made is anti-competitive or not. All this will change once the guidelines are put in place,” sources said.

For instance, currently the CCI is conducting an inquiry into the allegations of predatory pricing, deep discounting, preferential seller listing and exclusive partnerships against Flipkart and Amazon. The two firms had approached the Karnataka high court and subsequently the Supreme Court to restrain the CCI from going ahead with such an inquiry but did not get any relief. “The inquiry may or may not show them as guilty but in either case standards norms would be missing by which these firms need to abide, hence fixing regulatory norms is a must,” sources said.

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The guidelines will look into aspects like mergers & acquisitions between two e-commerce firms in the same space, how much market share can such a merged entity have, what kind of cross-holdings can there be between two or more players.

“These are early days and the matter is on the drawing board. A public consultation will be done to seek stakeholders comment before the government proceeds to finalize such guidelines,” sources said.

Currently, the Information Technology Rules regulate only social media platforms like Twitter, Facebook, Instagram etc. There are also regulatory guidelines for over-the-top players like Netflix, Amazon Prime Video etc. These are intermediaries which are in sphere of information and entertainment . Sources said that regulating e-commerce intermediaries on grounds of only misinformation is not enough as they need to be regulated on grounds of competition.

Sources said that such competition-related guidelines relating to market share caps and cross-holding norms are in place and applies to telecom service providers, so while finalizing the rules for e-commerce firms, these may be referred to.