Big smartphone companies, including Samsung and Xiaomi, are under scrutiny for alleged collusion with e-commerce platforms Amazon and Flipkart.
Regulatory reports obtained by Reuters reveal that these companies launched products exclusively on these platforms, violating Indian antitrust laws.
Amazon and Flipkart Violations
Investigations by the Competition Commission of India (CCI) have uncovered that Amazon and Flipkart favored select sellers, prioritized certain listings, and offered deep discounts, disadvantaging other competitors.
The CCI’s reports, totaling over 2,700 pages, reveal that several smartphone brands—Samsung, Xiaomi, Motorola, realme, vivo, Lenovo, and OnePlus—were involved in these exclusive launches.
Impact on Free Competition
The CCI’s findings highlight that exclusivity practices undermine fair competition and harm consumers. CCI’s additional director general, G.V. Siva Prasad, emphasized that “exclusivity in business is anathema” to competition and consumer interests.
Smartphone Market and E-commerce Growth
Despite attempts by Amazon and Flipkart to downplay the allegations, the CCI reports confirm that exclusive phone launches were widespread.
Counterpoint Research shows that Samsung and Xiaomi hold a combined market share of around 36% in India, while Vivo has 19%. The Indian e-retail market is projected to grow from $57-60 billion in 2023 to over $160 billion by 2028, according to Bain consultancy.
Datum Intelligence reports that online smartphone sales rose to 50% in 2022 from 14.5% in 2013. In 2023, Flipkart and Amazon held 55% and 35% of the online phone market, respectively.
Legal Complications for Smartphone Companies
The investigation’s scope includes major smartphone brands, potentially leading to significant legal and compliance challenges. The CCI has demanded certified financial statements from Xiaomi, Samsung, OnePlus, realme, and Motorola for three fiscal years up to 2024.
Impact on Retailers and Consumers
The investigation originated from a 2020 complaint by the Confederation of All India Traders (CAIT), representing 80 million members.
CAIT accused Amazon, Flipkart, and smartphone companies of favoring online-exclusive phone launches, disadvantaging offline retailers.
The CCI reports indicate that exclusive launches harmed small retailers and pushed customers towards online platforms for the latest models.
Penalties and Changes
In the coming weeks, the CCI will review objections from Amazon, Flipkart, smartphone companies, and the retail association. Possible outcomes include fines and mandated changes in business practices to ensure fair competition.
Overall, the CCI’s findings mark a significant advancement in regulating India’s e-commerce sector, potentially resulting in major penalties and reforms for smartphone manufacturers and e-commerce giants like Amazon and Flipkart, who have leveraged exclusive partnerships to enhance their competitive position.