E-COMMERCE VS. SMALL RETAILERS

The last few decades have witnessed unprecedented growth in the electronic commerce industry or e-commerce industry on a global scale and India is not an exception.

Owing to the advent of the e-commerce retail market that brings along a vast number of buyers and sellers through the medium of the World Wide Web, there has been a tremendous change to the market and distribution system. 

Large e-commerce industries sell goods at a very low price as compared to the traditional cement and bricks stores which force these stores to work towards attracting the customers. This factor has resulted in tilting of balance towards the e-commerce sectors thereby creating a source of tension between two competing networks. These tensions lead to legal complexities which are addressed through the antitrust regimes. 

The intent behind antitrust/competition law is the promotion of healthy and positive competition in the economy and in India, we have Competition Act’2002 (hereinafter referred to as the “Act”). The Act seeks to prohibit abuse of dominant position and also creates a Competition Commission of India entrusted with the obligation of preventing practices that have an appreciable adverse effect on the competition.  A new paradigm of the role of the Commission as a regulator to the abuse of a dominant position in India is a matter of study in this article. 

DOMINANT POSITION

Dominance is not considered bad per se but its abuse is.

For the purpose of understanding the concept of abuse of dominance, it is important to understand the meaning of Dominant Position. 

Explanation (a) of Section 4 of the Act defines the dominant position in terms of a position of strength enjoyed by an enterprise, in the relevant market in India, which enables it to:

1. 1. operate independently of the competitive forces prevailing in the relevant market; or
   2. affect its competitors or consumers or the relevant market in its favour 

Dominance refers to the ability of the enterprise to behave/act independently of the market forces which determines its dominant position. No enterprise in a perfectly competitive market has control over the market in determination of a price of the product. 

ASSESSMENT OF DOMINANCE

Keeping this in view, the Act under section 19(4) specifies certain factors that should be taken into consideration while determining whether an enterprise is dominant or not: 

• • market share of the enterprise
  • size and resources of the enterprise
  • size and importance of the competitors
  • the economic power of the enterprise including commercial advantages over competitors
  • vertical integration of the enterprises or sale or service network of such enterprises
  • dependence of consumers on the enterprise
  • monopoly or dominant position whether acquired as a result of any statute or by virtue of being a Government company or a public sector undertaking or otherwise
  • entry barriers including barriers such as regulatory barriers, financial risk, the high capital cost of entry, marketing entry barriers, technical entry barriers, economies of scale, high cost of substitutable goods or service for consumers
  • countervailing buying power
  • market structure and size of the market
  • social obligations and social costs
  • relative advantage, by way of the contribution to the economic development, by the enterprise enjoying a dominant position having or likely to have an appreciable adverse effect on competition

The Commission is also authorised to consider any other factor which it may consider relevant for the determination of dominance.  

In Re: Lifestyle Equities C.V and Another v. Amazon Seller Services Private Limited and Others (Case No 9 0f 2020) the informant alleged that the opposite party- 1(hereinafter referred to as OP’s) indulged in Abuse of Dominance by following a modus operandi that has affected the relevant market in OP’s favour. The CCI observed that

“25. Taking into consideration the present market constructs it does not appear that anyone platform has occupied a dominant position in the relevant market as envisaged u/s 4 of the Act. 

26. OP-1 does not seem to be a dominant entity in the relevant market. In the absence of dominance, the question of abuse of dominant position does not arise”. 

In Re: Delhi Vyapar Mahasangh V. Flipkart Internet Private Limited and its affiliated entities And Ors (Case No 40 of 2019) the informant alleged that both Flipkart and Amazon are alleged to be jointly dominant in the relevant market and are stated to be abusing their dominance in the present case. The CCI with respect to the allegations of joint/collective dominance observed that

“ 15. The Commission notes that the Informant has levelled allegations against Flipkart and Amazon marketplaces under Section 4 of the Act on account of joint dominance. The Commission notes that it is a settled position that the Act does not provide for an inquiry into or investigation into the cases of joint/collective dominance as the same is not envisaged by the provisions of the Act. Therefore, the Commission need not deliberate further on allegations on account of joint dominance as the same being untenable under the Act”

In All India Online Vendors Association vs Flipkart India Private Limited and Ors (Case No 20 of 2018) the informants alleged that Flipkart which is stated to be the marketplace for selling goods online in India is dominant in the aforesaid market. The CCI observed that

“ 29. Looking at the present market construct and structure of online marketplace platforms market in India, it does not appear that anyone player in the market is commanding any dominant position at this stage of evolution of the market. 

30. Flipkart India is not dominant in the relevant market of “Services provided by online marketplace platforms for selling goods in India”; therefore, the issue of abuse of dominant position does not arise.”

RELEVANT MARKET

For the purpose of the competition, dominance has significance only when the relevant market is defined. The relevant market as per Section 2(r) of the Act means “the market that may be determined by the Commission with reference to the relevant product market or the relevant geographic market or with reference to both the markets”. 

COMPETITION LAW JURISPRUDENCE WITH RESPECT TO DELIANIATION OF RELEVANT MARKET

There are two distinct markets in the context of e-commerce which are online markets and offline markets where even the online market by itself can be regarded as a relevant market. 

The CCI in the case of Mr Mohit Manglani v. M/s Flipkart India Ltd. & Ors. (Case No 80 of 2014) in para 18:

“In this context, the Commission is convinced with the OPs that every product cannot be taken as a relevant market in itself. Irrespective of whether we consider e-portal market as a separate relevant product market or as a sub-segment of the market for distribution, none of the OPs seems to be individually dominant.”

left open the question of classifying e portals markets as a different pertinent item advertise or as a negligible sub-fragment of the market for dissemination. 

However, the position was clarified by the CCI in the case of Mr Asish Ahuja v. Snapdeal.com (Case No 17 of 2014), clarified the position by clearly stating that both the markets are different in a matter of discount and purchase experience. 

“In such cases, the consumers look for the options available in both the markets and thereby, decide accordingly. In case if the price of the goods in the online market has elevated significantly, then there is a likelihood that the consumer will shift towards the offline market and vice-versa. On the basis of such reasoning, the Commission is of the opinion that the two markets-online and offline, are divergent channels of distribution of the like product and not two different relevant markets.”

The order of the CCI in All India Online Vendors Association vs Flipkart India Private Limited and Ors (Case No 20 of 2018) saw a deviation from the order in Mr Asish Ahuja v. Snapdeal.com (Case No 17 of 2014)  and observed that

“ 23. No doubt, to the end consumers, the distinction line between online and offline sellers is sometimes blurry, yet it cannot be denied that online marketplaces offer convenience for sellers as well as the buyers. For the sellers, they save costs in terms of setting up of a store, sales staff, electricity and other maintenance charges. The benefits afforded to buyers include comfort of shopping from their homes thus saving time, commuting charges and at the same time they can compare multiple goods. Be that as it may, nothing significant turns upon such convergence on the outcome of this case as even if the market is confined to online space, the present market construct, as detailed later, would not indicate any player with such a market power so as to confer a dominant position upon it.”

In All India Online Vendors Association v. Flipkart India Private Limited and Ors (Case No 20 of 2018), the counsel on behalf of opposite parties urged that there was a need to define two separate relevant markets in relation to Flipkart India and Flipkart Internet. The counsel further submitted that Flipkart India was active in the business to business and to assess its conduct under section 4 of the Act, such assessment could only be undertaken with regard to the Business to Business (B2B) market in India. In relation to Flipkart Internet, the counsel submitted that the definition of the relevant should be the pan-India market for retail i.e. B2C, including online and offline channels of distribution. The Commission observed that “

19. There is no need to define two relevant markets as urged by the counsel appearing on behalf of Flipkart and the impugned conduct can be examined with reference to the delineation of one relevant market alone which is relatable to Flipkart Internet”

as the informant made allegations of abuse of dominance against Flipkart Internet/ OP-2. 

The Act u/s 19(5) states that in order to determine the constituents of a “relevant market”, the Commission shall have due regard to the “relevant geographic market’’ and “relevant product market”. 

Relevant Product Market as per section 2(t) is defined in terms of substitutability. It is the smallest set of products (both goods and services) which are substitutable among themselves, given a small but significant non-transitory increase in price. The Commission u/s 19(7) of the Act, while determining the “relevant product market”, have due regard to all or any of the following factors: 

• • physical characteristics or end-use of goods
  • price of goods or service
  • consumer preferences
  • exclusion of in-house production
  • existence of specialised producers
  • classification of industrial products

Relevant Geographic Market as per section 2(s) is defined in terms of  “the area in which the conditions of competition for the supply of goods or provision of services or demand of goods or services are distinctly homogeneous and can be distinguished from the conditions prevailing in the neighbouring areas”. The Commission u/s 19(6) of the Act while determining the “relevant geographic market”, have due regard to all or any of the following factors: 

• • regulatory trade barriers
  • local specification requirements
  • national procurement policies
  • adequate distribution facilities
  • transport costs
  • language
  • consumer preferences
  • need for secure or regular supplies or rapid after-sales services

ABUSE OF DOMINANCE

Abuse occurs when an enterprise or a group of enterprises uses its dominant position in the relevant market in an exclusionary or/and an exploitative manner. The act u/s 4 (2) (a) to (e) gives an exhaustive list of practices that constitute abuse of dominant position and are therefore prohibited. Only when an enterprise enjoying a dominant position in the relevant market in India adopts such practices, it constitutes abuse. 

• • directly or indirectly, imposes unfair or discriminatory condition in purchase or sale of goods or service; or
  • directly or indirectly, imposes unfair or discriminatory price in purchase or sale (including predatory price) of goods or service.
  • limits or restricts production of goods or provision of services or market therefore; or
  • limits or restricts technical or scientific development relating to goods or services to
    the prejudice of consumers; or
  • indulges in practice or practices resulting in denial of market access [in any manner]; 
  • makes a conclusion of contracts subject to acceptance by other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts; 
  • uses its dominant position in one relevant market to enter into, or protect, other relevant markets.

COMPETITION CONCERNS IN THE E-COMMERCE SECTOR IN INDIA

In order to establish a consumer base and for the purpose of acquiring the market, the e-commerce sectors resort to various innovative steps and methods such as exclusive agreements, deep discounting, preferential treatment to certain sellers, predatory pricing which raise competitive concerns. 

A. Treatment Of Exclusive Arrangements and Preferential Treatment 

Section 3(4) of the Act states that any agreement amongst enterprises or persons at different stages or levels of the production chain in different markets, in respect of production, supply, distribution, storage, sale or price of, or trade-in goods or provision of services that includes a tie-in arrangement, exclusive supply agreement, exclusive distribution agreement, refusal to deal, resale price maintenance, shall be an agreement in contravention u/s 3(1) if such agreement causes or is likely to cause an appreciable adverse effect on competition in India. 

Exclusive agreements, however, are not per se anti-competitive but they raise potential competition concerns when they are used as an exclusionary tactic in order to either foreclose competition to rivals or to impede entry. In today’s modern economy we witness that certain products that belong to specific brands are available for purchase only through e-retailers. 

CCI in its Market Study On E-commerce in India initiated in April 2019 called as explained that the

“74. retailers who participated in the study, smartphone brands are launching their newest products exclusively on one of the two major goods marketplace platforms, through the preferred sellers of the platform concerned. These preferred sellers operate exclusively on a platform and do not multi-home. Thus, during the initial period after launch, these products are available exclusively on a single online platform and are made available to the offline/brick and mortar retailers later.”

In Mr Mohit Manglani v. M/s Flipkart India Pvt. Ltd. & Ors (Case No 80 of 2014) an issue emerged before the CCI in relation to the sale of the book titled “Half Girlfriend” written by Chetan Bhagat which was available for sale exclusively at Flipkart. The informant, in this case, alleged that the opposite parties entered into exclusive agreement to sell the selected product exclusively on the selected portal at the exclusion of other e portals or physical channels through any other physical channels. This as per the informant amounted to an exclusive agreement having an appreciable adverse effect on the competition which was violative of section 3(4) and section 4 of the act. The CCI rejected the allegations and opined that, 

“ 16. The bare perusal of the agreement on the touchstone of the factors laid out above suggests that such agreements do not result in AAEC. It does not seem that such arrangements create any entry barrier for new entrants. It seems very unlikely that an exclusive arrangement between a manufacturer and an e-portal will create any entry barrier as most of the products which are illustrated in the information to be sold through exclusive e-partners (OPs) face competitive constraints. For example, mobile phones, tablets, books, cameras etc., are neither alleged nor seem to be trodden by monopoly or dominance. Further, it does not appear that because of these exclusive agreements any of the existing players in the retail market are getting adversely affected, rather with new e-portals entering into the market, the competition seems to be growing.” 

In All India Online Vendors Association vs Flipkart India Private Limited and Ors (Case No 20 of 2018) the informants alleged that OP-1 sold goods to companies like WS Retail Services Private Limited, which was owned by founders of OP-2 till 2012, at a discounted price and thereafter, these are sold on the platform operated by OP-2 which amounted to preferential treatment to certain sellers. The CCI observed that

“31. The Commission also observes that so far as the issue of preferential treatment given by OP-1 to exclusive seller (WS Retail Services Private Limited) which is stated to be owned by OP-2, suffice to point out that the Informant itself has admitted in the Information of such structural link between OP-2 and WS Retail existed only till 2012. Hence, no such concern is present today” 

In Re Delhi Mahavyapar Sangh v. Flipkart Internet Private Limited and Ors (Case No 40 of 2019) an issue emerged before the CCI in relation to the instances of several vertical agreements between Flipkart with their preferred sellers on the platform and Amazon with their preferred sellers. The informant further alleged that OP sold their private label brands through their platforms by routing them to few preferential sellers. This modus operandi is being employed by Flipkart across all categories, including smartphones. By having exclusive tie-ups in the relevant market with the smartphone companies, the opposite parties provided exclusivity through discounting and preferential listings which led to the foreclosure of other non-preferred traders or sellers from these online marketplaces and was violative of Section 3 (1) of the Act read with Section 3(4) of the Act. The CCI accepted the contentions of the informants and observed that, 

“ 23. It is observed that there are only a few online sellers, which are selling these exclusively launched smartphones either through Amazon or through Flipkart. Based on the evidence adduced by the Informant and information available in the public domain, it can be prima facie inferred that there appears to be an exclusive partnership between smartphone manufacturers and e-commerce platforms for the exclusive launch of smartphone brands. Thus, exclusive launch coupled with preferential treatment to a few sellers and the discounting practices create an ecosystem that may lead to an appreciable adverse effect on competition” 

In Re: Lifestyle Equities C.V and Another v. Amazon Seller Services Private Limited and Others (Case No 9 of 2020) pertains to selling of counterfeit/unlicensed/unauthorised products by the opposite party by entering into an inter-se agreement with themselves that created an exclusionary effect for the other non-preferred sellers and has concentrated and amalgamated the sellers with which it has, exclusive tie-in arrangements, thereby limiting the number of suppliers and distorting competition based on preferential treatments. The CCI rejected the allegations and observed that

“29. However, in their response to the additional information request, it has been clarified by the Informants that the contracts of OP-1 with brands such as Allen Solly, American crew, US Polo Association and Adidas etc. are not exclusive in nature. As noted, exclusive tie-ups between platforms and fashion brands do not seem to exist and there are plenty of channels of intermediation available for fashion brands, sellers/retailers and consumers to access/reach each other”. 

B. Deep Discounting And Predatory Pricing 

In order to lure consumers and to expand their customer base, online shopping portals pursue a growth over profit strategy to subsidise users by resorting to low pricing strategies such as Big billion day and Diwali offers. Discounts lead to lower prices that reflect cost savings that arise from a variety of sources. This act of the online players invites fury of the traditional offline sellers as they lament over decreasing sales due to the customers visiting the markets only to have a physical look of the product. They actually purchase through online platforms as they offer anti-competitive cheaper prices. 

These anti-competitive practices invite CCI’s attention as, as per Section 4(2)(a)(i) of the Act, imposition of any unfair or discriminatory price on purchase or sale (including predatory price) of goods or service directly or indirectly results in abuse of dominant position. Further explanation (b) of Section 4 defines  “predatory price” as a price which is below the cost for the sale of goods or provision of services as may be determined by regulations, of production of the goods or provision of services, with a view to reduce competition or eliminate the competitors. The regulations as per Section 2(q) refers to the regulations made by the Commission under section 64. 

The Act however only prohibits “predatory pricing” or “below-cost pricing” by companies that have a dominant position in a relevant market in India. Predatory pricing as a matter of law would become inapplicable if the company is not dominant. 

As per the study initiated by the CCI in April 2019 called as Market Study On E-commerce in India, the CCI explained that the

“ 100. Sellers/service providers with respect to discounts that are offered on/by marketplace platforms raise concerns threefold concerns which are that:

(i) discounts are discriminatory

(ii) discounts imposed by platforms in the exercise of their superior bargaining power adversely affects the business models of the service providers iii) discounts push prices to below-cost levels in certain product categories and impair the offline small retailer’s ability to compete.

104. In the goods category, the issue raised by the sellers relates to online discounts on major goods platforms purportedly pushing the prices below cost and impairing the offline small retailer’s ability to compete in certain product categories.” 

In Re: Delhi Vyapar Mahasangh V. Flipkart Internet Private Limited and its affiliated entities And Ors (Case No 40 of 2019), the informants alleged that Flipkart provides deep discounts to a select few preferred sellers (such as Omnitech Retail) on its platform which adversely impacts non-preferred sellers such as members of the Informant from competing with such sellers on Flipkart’s online platform. They also made similar allegations of deep discounts by Amazon to the detriment of non-preferred sellers. The Commission, in this case, held that in order to decide whether funding of discounts is an element of exclusive tie-ups or not is a matter that merits investigation. 

It observed that:

“24. The Commission perused the prices for different smartphone brands sold through Flipkart and Amazon, i.e. original price and discounted price. It was observed that certain smartphone brands/models are available at a significantly discounted price on these platforms and are sold largely through the sellers identified by the Informant, as  the platforms preferred sellers.” 

C. PREFERENTIAL LISTING 

In Re: Delhi Vyapar Mahasangh V. Flipkart Internet Private Limited and its affiliated entities And Ors (Case No 40 of 2019), the informants alleged that Flipkart lends the word “Assured Seller” to the products sold by its preferred sellers which creates a bias in favour of preferred sellers to the detriment of other sellers. They further stated that such preferential listing on the OP’s website results of the non preferred sellers further down in the search results without any bias whatsoever. They further alleged that even Amazon lends the word “fulfilled” to the products sold by preferred sellers and further allegedly creates search bias by listing its preferred sellers in the first few pages of search results. The Commission observed that, 

“25. The issue of the preferential listing should also be viewed in conjunction with the foregoing. Competition on the platforms may get influenced in favour of the exclusive brands and sellers, through higher discounts and preferential listing. Thus, the allegations are interconnected and warrant a holistic investigation to examine how the vertical agreements operate, what are the key provisions of such agreements and what effects do they have on competition. Given that both the major platforms are stated to follow the same mechanics in terms of their exclusive tie-ups and preferential terms with brands/sellers, competition between the platforms prima facie does not play a role in mitigating the potential adverse effect on competition on the platforms.”

D. Platform To Business Contract Terms 

Businesses get the required potential in online marketplace platforms as these platforms create significant market opportunities. The ample opportunities lead to the growing dependence of businesses on these platforms. Fragmented supply side with only a few major intermediary platforms creates a situation akin to asymmetrical bargaining power. 

An issue of unilateral revision in contract terms, as well as imposition of unfair condition or price in sale or purchase of goods and services through contractual provisions, leads to growing unease and tension in the platform business relations. Section 4(2)(a)(i) prohibits the imposition of unfair condition or price in sale or purchase of goods and services by dominant enterprises. These terms in a contract also result in direct or indirect exclusion on competition which is exploitative/ unfair to the business users that are capable of being examined under section 3(4) of the Act. 

COMPETITION CONCERNS IN UNITED STATES OF AMERICA

Section 2 of the Sherman Antitrust Act’ 1890 deals with, “Monopolizing Trade A felony; Penalty” and states that,

“Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court.”.

Monopolisation requires proof of a causal connection between the anticompetitive conduct and the obtaining or maintenance of monopoly power.

Section 7 of the Clayton Act prohibits “Acquisition By One Corporation Of Stock Of Another” and states that,

“No person engaged in commerce or in any activity affecting commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital and no person subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of another person engaged also in commerce or in any activity affecting commerce, wherein any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition or to tend to create a monopoly.” 

In the United States (US), abuse of dominance is tested seriously with the first consideration of the relevant market. The courts have emphasised the importance of first defining the relevant markets by taking into account both the product and geographic aspects in Inc, Image Technical Services Inc v. Eastman Kodak Co.

The set of merger guidelines—written by the Antitrust Division of the Department of Justice (DOJ) and the Federal Trade Commission (FTC)—which specify methods for analysing and defining markets.

The Federal Trade Commission (FTC) of USA interviewed small sellers on Amazon in order to ascertain if the company was using its market power to hurt competition and released its report titled as “Investigation Of Competition In Digital Markets”. In its report, the FTC stated that

“There are several factors that make successful entry or expansion by a challenger to Amazon unlikely. Barriers to entry include:

(1) network effects, which make it difficult for another marketplace to achieve a comparable number of buyers and sellers;

(2) switching costs associated with consumers shopping outside of the Amazon ecosystem; and

(3) the steep costs of building a logistics network comparable in size and scope to Amazon’s massive international footprint in fulfilment and delivery. 

Amazon expanded its market power by avoiding taxes, extracting state subsidies, and engaging in anticompetitive conduct tactics that have given the company an unfair advantage over actual and potential competitors.” 

The latest jurisdiction to launch an antitrust probe into Amazon’s online retailer’s practices is Canda to check Amazon’s conduct with third-party sellers who use the company’s marketplace. Its investigation focuses on abuse of dominance as well as to check whether a dominant firm in the market is engaging itself in behaviour that is intended to eliminate competition or to deter the entry of new rivals.   

POWERS OF THE COMMISSION TO ORDER AFTER INQUIRY INTO AGREEMENTS OR ABUSE OF DOMINANT POSITION

As per section 27, where after inquiry the Commission finds that any agreement referred to in section 3 or action of an enterprise in a dominant position, is in contravention of section 3 or section 4, as the case may be, it may pass all or any of the following orders, namely:—

1. 1. direct the parties to discontinue and not to re-enter such agreement;
   2. direct the enterprise concerned to modify the agreement.
   3. direct the enterprises concerned to abide by such other orders as the Commission may pass and comply with the directions, including payment of costs if any; and
   4. pass such other orders or issue such directions as it may deem fit.
   5. can impose such a penalty as it may deem fit. The penalty can be up to 10% of the average turnover for the last three preceding financial years upon each of such persons or enterprises which are parties to bid-rigging or collusive bidding.

Section 28 empowers the Commission to direct division of an enterprise enjoying a dominant position to ensure that such an enterprise does not abuse its dominant position. 

Under Section 33, during the pendency of an inquiry into abuse of dominant position, the Commission may temporarily restrain any party from continuance with the alleged offending act until the conclusion of the inquiry or until further orders, without giving notice to such party, where it deems necessary. 

WAY AHEAD

To curtail the acts resorted by major eCommerce giants creating an exclusionary as well as the exploitative effect on competition in India the Competition Commission Of India in its Market Study On E-commerce in India initiated in April 2019 suggested the marketplace platforms adopt certain self-regulatory measures. With respect to revision in contract terms, the CCI asked them to notify the concerned business users in case of any proposed changes in terms and conditions. The same is not to be implemented before the expiry of a notice period that is reasonable as well as proportionate to the nature and extent of the envisaged changes as well as their consequences for the concerned business user. For discounting policies, marketplace platforms should bring out clear and transparent policies on discount which includes the basis of the discount rates funded by the platforms for different products/suppliers as well as implications of participation or non-participation in discount schemes. 

The Press Note No 2 of 2018 issued by the Ministry Of Commerce and Industry, Department of Industrial Policy and Promotion based on Reviewing The Policy On FDI in E-commerce, allowed eCommerce entities to only engage in B2B eCommerce and not B2C eCommerce with respect to FDI policy. Further, 100% FDI was permitted through automatic route in eCommerce marketplace model ( providing information technology platform by eCommerce entity on a digital and electronic network to act as a facilitator between buyer and seller) but not in inventory-based model (e-Commerce activity where the inventory of goods and services is owned by eCommerce entity and is sold to consumers directly). 

Further, the Draft National e-Commerce Policy, issued by the Department for Promotion of Industry and Internal Trade (“DPIIT”) on 23 February 2019 seeks to prepare and enable the stakeholders to fully benefit from the opportunities that would arise from digitalization of the domestic digital economy. With respect to anti-counterfeiting, the policy has the following provisions: 

• Joint and several liabilities: The policy imposes a joint and several liabilities for counterfeit products on the e-commerce entity as well as the seller 
• Consumer Grievance cell: §6.9 and §6.11 deals with the resolution mechanism of the issues related to the quality of goods and services. It imposes an obligation on all the e-commerce entities to display phone numbers and email addresses for consumer grievance, along with details of the sellers including their phone number, customer complaint number, email address, physical address, etc. Further, it imposes a mandate on e-commerce portals to acknowledge consumer complaints with clear timelines for their disposal specified on the website/app 
• Country of Origin: The policy makes it mandatory to specify the country of origin and value addition done in India for imported goods and goods that are exported from India via e-commerce entities.
• Undertaking on Genuineness of products: §13.1.2 states that sellers are required to give an undertaking about the genuineness of their products which should be accessible to the consumers 
• Trademark: §13.1.3 permits trademark owners to register themselves with e-commerce platforms, and also gives them the facility to be put in place by platforms. Before listing luxury goods, cosmetic or goods impacting health, platforms are under a mandate to seek a trademark owner’s authorisation before listing the product. 
• Remove counterfeiting goods: If in case the seller is unable to prove that the product is genuine, he would be required to remove the counterfeit goods’ listings. The platform is under a mandate to notify the trademark owner of receiving a complaint about a fake product within 48 hours of receiving the complaint.

The policy gives small firms and startups attempting to enter the digital sector the status of the infant industry in the presence of network effects which create barriers to entry and makes access of data, the centre of this approach. 

Irrespective of the policy’s aim to enable stakeholders to benefit fully from the opportunities arising from digitalization of the domestic digital economy, exclusion of penal provision from the purview of the policy acts as a major set back.  In order to make the policy truly comprehensive and rigorous, there is thus a need to include civil and/or criminal penalty corresponding to each indicative offence. 

However irrespective of the present policies as well as the enactment of the CCI Act, 2002, the determination of dominance always boils down to the interpretation of relevant product and geographical market. Thus there is a need to create objective criteria to determine dominance so that wrongdoers do not get away by the channel of lack of appreciable adverse effect on competition. For Example: In the United States, the safe harbour (i.e. a level below which a firm cannot be found dominant) is thought to be a 50 per cent market share and a market share over 70 per cent supports a rebuttable inference of dominance. Further, it is also important to introduce a concrete “Market Share Test” like other jurisdictions such as South Africa where more than 45% market share is considered dominant whereas in Israel where more than 50% market share is considered as dominant is one area where an enactment of the law is required. Owing to the emergence of the eCommerce industry having high potential for growth, there is a need to amend laws and upgrade competition rules to address the competition issues prevailing in the digital economy. 

 
AUTHOR OF THE ARTICLE
ADV. SHRUTI KAKKAR
Junior Law Associate, Indian Law Watch
Shruti is BA LL.B from Guru Gobind Singh University pass out. She has been in top three winner positions in several reputed competitions of law.