In Short:
Samsung, Xiaomi, and other smartphone makers are accused of colluding with Amazon and Flipkart to launch phones exclusively on their platforms, breaking Indian antitrust laws. The reports from the Competition Commission of India (CCI) highlight preferential treatment for select sellers and harmful discounting practices. Investigations may lead to fines and changes in business practices for the involved companies.
Samsung, Xiaomi, and several other smartphone manufacturers have been accused of colluding with Amazon and Walmart‘s Flipkart to execute exclusive product launches on their Indian e-commerce platforms, thus violating antitrust regulations, based on regulatory documents reviewed by Reuters.
Antitrust Violations Identified
Investigation findings from the Competition Commission of India (CCI) indicate that both Amazon and Flipkart have infringed upon local competition laws by favoring select sellers, prioritizing specific product listings, and offering significant discounts. These practices are reported to have negatively impacted other competing businesses, as revealed by Reuters this week.
The CCI’s extensive 1,027-page report on Amazon noted the involvement of Indian subsidiaries of five companies—Samsung, Xiaomi, Motorola, Realme, and OnePlus—in what has been characterized as collusive behavior concerning exclusive smartphone launches, which breaches competition laws.
Implications for Smartphones and Retailers
In a parallel investigation, a 1,696-page report focused on Flipkart detailed similar alleged misconduct involving Indian branches of Samsung, Xiaomi, Motorola, Vivo, Lenovo, and Realme. The inclusion of these smartphone manufacturers in the investigation presents additional legal and compliance challenges.
According to G.V. Siva Prasad, additional director general of the CCI, “Exclusivity in business is anathema. Not only is it against free and fair competition, but it also runs counter to consumer interests.” Both the Amazon and Flipkart reports share identical conclusions regarding these practices.
Findings and Reactions
Reuters has emerged as the first to highlight the allegations of anticompetitive behavior against the smartphone companies stemming from the CCI’s reports, which were finalized on August 9 and remain unpublicized.
While Xiaomi opted not to provide commentary, other smartphone manufacturers did not respond to inquiries. Meanwhile, Amazon, Flipkart, and the CCI have yet to issue comments regarding the findings of the reports.
According to the reports, both Amazon and Flipkart allegedly “deliberately downplayed” the exclusivity allegations during the investigations, despite officials confirming that such practices were widespread.
Market Dynamics and Future Outlook
Data from Counterpoint Research illustrates that Samsung and Xiaomi hold significant prominence in India’s smartphone market, collectively accounting for nearly 36% of the market share, with Vivo following at 19%. The Indian e-retail sector is projected to surpass $160 billion by 2028, a remarkable increase from the estimated $57-60 billion in 2023, according to Bain & Company.
The findings from these investigations represent a considerable setback for both Amazon and Flipkart, particularly in a crucial growth market where they have faced criticism from smaller retailers for adversely affecting their offline operations.
Moreover, the CCI has mentioned that both platforms leveraged foreign investments to offer subsidized rates on services like warehousing and marketing to a chosen group of sellers.
Next Steps
As part of the ongoing investigation, several smartphone companies—namely Xiaomi, Samsung, OnePlus, Realme, and Motorola—have been instructed to provide their financial statements for the three fiscal years leading up to 2024, certified by their respective auditors, as per an internal CCI document dated August 28 that was also reviewed by Reuters.
The investigation was initiated in 2020 following a complaint from an affiliate of the Confederation of All India Traders, the nation’s largest retailer association, which comprises 80 million members. In the coming weeks, the CCI will assess any objections to its findings from Amazon, Flipkart, the retailer association, and the implicated smartphone companies, with the potential for imposing fines and enacting changes in business practices.
Indian retailers have repeatedly claimed that the exclusive launches of smartphones have unfairly disadvantaged offline sellers, who are often left waiting for the release of new models while customers turn to online marketplaces.
“Exclusive launches have severely impacted both ordinary sellers on the platform and brick-and-mortar retailers, who received mobile phones at a much later date,” noted both CCI reports, referencing analyses conducted on data from smartphone companies.
In a trend indicative of changing consumer behavior, research firm Datum Intelligence estimates that 50% of phone sales were conducted online in the previous year, a substantial increase from 14.5% in 2013. In 2023, Flipkart captured a 55% share of online phone sales, while Amazon accounted for 35%.
© Thomson Reuters 2024
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
