NEW DELHI : In a major blow to some of the biggest players in the Indian smartphone and e-commerce markets, the Competition Commission of India (CCI) has found that leading smartphone companies including Samsung, Xiaomi, and others colluded with Amazon and Flipkart to launch exclusive products on their platforms, violating antitrust laws. These revelations are detailed in regulatory reports reviewed by Reuters, further intensifying the legal challenges facing these firms in a rapidly growing market.
The CCI’s investigation found that Amazon and Flipkart manipulated the market by giving preferential treatment to specific sellers, prioritizing certain listings, and offering steep discounts that undermined local competition. These practices reportedly hurt smaller businesses, both online and offline, and gave the smartphone giants an unfair advantage in India’s lucrative retail landscape.
Exclusive Deals: A Breach of Competition Laws
The CCI’s 1,027-page report on Amazon exposed five major smartphone brands Samsung, Xiaomi, Motorola, Realme, and OnePlus as being involved in “exclusive” product launches in collusion with the e-commerce giant. Flipkart’s report, even more extensive at 1,696 pages, pointed to similar violations by the Indian units of Samsung, Xiaomi, Motorola, Vivo, Lenovo, and Realme.
These exclusive deals, the CCI claims, are not just damaging to competition but also detrimental to consumers. G.V. Siva Prasad, the CCI’s Additional Director General, called the practice of exclusivity “anathema,” emphasizing its harmful impact on free and fair competition.
Legal Headaches for Smartphone Makers
The inclusion of high-profile companies like Samsung and Xiaomi, which together hold a 36% share of India’s smartphone market, could spell significant legal and compliance troubles for these firms. The CCI has ordered several smartphone manufacturers Xiaomi, Samsung, OnePlus, Realme, and Motorola to submit detailed financial statements for three consecutive fiscal years through 2024. These submissions will be scrutinized as part of the broader investigation.
No Comment from the Giants
So far, the major smartphone companies have largely stayed silent. While Xiaomi declined to comment, others including Samsung and Motorola did not respond to requests for comment. Amazon, Flipkart, and the CCI have also remained tight-lipped, neither confirming nor denying the findings publicly.
Online Sales Boom Amid Growing Scrutiny
The CCI’s investigation was initially sparked by a complaint from an affiliate of the Confederation of All India Traders (CAIT), a powerful organization representing 80 million small retailers across India. For years, these smaller retailers have accused Amazon and Flipkart of undercutting their businesses by launching exclusive products online and withholding stock from brick-and-mortar stores. These grievances have grown as India’s e-retail market expands, with Bain & Company estimating that it could exceed $160 billion by 2028, up from $60 billion in 2023.
Data from Datum Intelligence underscores the shift toward online sales, showing that 50% of all smartphone sales in India occurred online in 2023, a dramatic rise from just 14.5% in 2013. Flipkart commanded a 55% share of these online sales, with Amazon close behind at 35%.
Next Steps: Fines and Mandates Await
In the coming weeks, the CCI will review objections from Amazon, Flipkart, the retailer association, and the smartphone companies. Depending on its final rulings, the commission could impose substantial fines and demand significant changes in business practices. These could include barring exclusive launches and forcing greater transparency in pricing and seller preferences.
For now, the smartphone companies and e-commerce giants face increasing scrutiny as India’s retail market continues to evolve. The challenge for these firms will be navigating both consumer expectations and regulatory pressures, especially in a market where online sales are rapidly growing, but offline businesses still wield significant influence.
