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Indian Sellers Collective Calls For Stringent Anti-Competition E-Commerce Policy And A Greater Role For CCI To Regulate Industry And Protect Interest Of Small Businesses

E-commerce laws in the country are not clear but competition laws which apply to every business, irrespective of size and nature, are clear and can be used to rein in e-commerce firms flouting the rules.

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Indian Sellers Collective organized a virtual panel discussion to deliberate on various challenges faced by small retailers/merchants in the wake of the Covid pandemic, policy loopholes, and unfair business practices of e-commerce firms that are creating livelihood challenges for them. The panel delved into the proposed amendments in Consumer Protection (E-Commerce) Rules, 2020 to understand its efficacy in addressing various issues faced by small merchants from the large e-commerce players.

Some key takeaways of the panel discussion were that the government has the intent to address the genuine concerns of consumers and small retailers and towards this, it has put in place laws to regulate e-commerce players in India which needs to be implemented in the right earnest. The panel concluded that the Competition Commission of India (CCI) has a big role to play in protecting the interests of consumers and sellers alike and what is required is the strict adherence to e-commerce policies for both international and domestic online marketplaces.

The esteemed panel pressed on the need for education and empowerment of consumers and sellers/small businesses on competition laws so that they can exercise the competition laws thereby checking the instances of exploitation of policy loopholes. It expressed satisfaction that investigation against the malpractice of firms like Amazons, Flipkart etc and demands implementation of anti-trust laws in India that are in line with the global trend. It called for nailing down errant e-commerce firms completely through a comprehensive policy framework and advocated business-friendly policies to support MSMEs that are the real growth engine of the economy and can provide solutions to the employment and livelihood challenges faced by the country.

The panelists were unanimous in their view that the Covid-19 pandemic has added to the financial woes of small retailers in India who are already facing unfair competition from large e-commerce players. These e-commerce players are using their financial muscle and exploiting policy loopholes to capture market share thereby driving small retailers/merchants out of business and destroying their livelihoods.

Expressing shock and concern about the little awareness about the competition laws in the country among small retailers and consumers, Mr. MM Sharma, Competition Law Expert and Head Practice Vaish Associates and Advocates commented, “E-commerce laws in the country are not clear but competition laws which apply to every business, irrespective of size and nature, are clear and can be used to rein in e-commerce firms flouting the rules. CCI is the only regulator in the country that can set e-commerce firms right. The competition body is now actively investigating complaints against e-commerce companies as the sector has gained rapid market share amid pandemic restrictions. It is a matter of time when these firms are going to lose this battle and all the small retailers/merchants need to do is to come together to demand stronger rules and fight strategically.”

He said that small retailers/traders who need visibility generally get into e-commerce platforms. These sellers are often exploited by large e-commerce firms that indulge in preferential selling and exclusive arrangements. These firms indulge in deep discounting, predatory pricing, etc using their deep pockets and technology to hook the customers. He noted that the new e-commerce bill is silent on the issue of predatory pricing and this needs to be changed by bringing in new provisions.

Expressing his viewpoint on the livelihood challenges faced by small merchants and retailers Mr. Abhay Raj Mishra, President of Public Response Against Helplessness and Action for Redressal (PRAHAR) stated,” Covid-19 related restrictions and unfair business practices of large e-commerce firms have put the livelihood of millions of small retailers and merchants at risk. This makes it important to render urgent support to MSMEs and plug the policy loopholes for their protection and development. We are not against technology or e-commerce but expect more action by the government against online market places that violate the spirit of the law for market dominance.”

Elaborating on the lack of comprehensive e-commerce laws in the country, AIOVA spokesperson stated, “India has only one law related to e-commerce, and it is only concerned with foreign investment laws. Our concern is that the government is not bringing any blanket law for e-commerce as a general activity in the country. This creates a situation where there are no applicable laws to regulate Indian e-commerce players who may flout the rules in future.”

Talking about the malpractices of foreign e-commerce companies and new e-commerce guidelines he added, “Foreign e-commerce players are indulging in predatory pricing. It is high time that the government understands their business model as such companies are indulging in business malpractices all over the world and are being investigated for their business conduct including in their home country. The new e-commerce guidelines touch upon various consumer concerns, but it is silent on the implementation part of it including high penalties and discontinuation of business which are a must to rein in these large e-commerce firms.”

Sharing his perspective on the impact of the Covid-19 lockdown on the livelihood of FMCG traders and retailers, and the respite they need to be provided, Mr. Dhairyashil Patil, National President of All India Consumer Products Distributors Federation (AICPDF) said,” The government is vocal about protecting the interests of small businesses, but it has not walked the talk. It has not imposed any strict action on the errant e-commerce platforms to date impacting the livelihood of 2-3 lakh traders. As far as new e-commerce guidelines are concerned, we have been advising government on the drafting of the new e-commerce guidelines and will be more than satisfied if the entire e-commerce guidelines are implemented. It is consumer-focused and takes care of all aspects that are hurting India customers including traders as a trader is also a consumer.”

He added that e-commerce is not at all a legitimate business and the sole objective of foreign e-commerce players is to capture the market by leveraging their deep pockets and luring consumers with deep discounts. These firms are mostly creating fewer low-end jobs and are causing 200% more job losses than the number of jobs they are creating. AICPDF is committed to make these firms accountable to the law of the land and follow ethical business practices. It has launched Bharat e-market, a competitive platform to give all the facilities of an e-commerce portal for small traders at no cost.

Talking about the stress faced by small traders/businesses due to capital investments and the need for the government to lend them a helping hand, Dr. PM Ganeshraam, Chief Founder Patron of AICPDF said, “Capital raised by small traders from banks against their personal property has been lying unused due to Covid restrictions. The government has not done anything yet to waive off interest on such capital raised. This is causing a lot of stress among small traders and is eroding the capital. This is the case all throughout the country and I wish the government will do something urgently to address the situation.”

On the provision of high penalty in case of delay in filing of returns, he stressed the need to waive such charges amid pandemic to give small merchants cushion to invest further. He added that families of at least 1 crore small businesses / merchants have gone into poverty amid pandemic and harsh regulations.

Sharing his views on the challenges ahead of small retailers in fighting large e-commerce players, Mr. CH Krishna, President of Federation of All India Distributors Association (FAIDA) highlighted, “Our lawyers and courts are facing challenges in understanding the business practice of discriminatory and predatory pricing followed by e-commerce companies, and mal-practices by large brick and mortar retailers who indulge in B2C selling under the garb of B2B selling. Also, small retailers do not have the wherewithal to match these retailers in terms of resources to offer deep discounts and even fight them in the court of law. These companies are even trying to bypass the existing banking system of the country by setting their own payment systems which is dangerous for the country.”

Addressing a query on the revival of livelihood of small traders in India Shriram Baxi, General Secretary, Federation of All India Distributors Associations (FAIDA) opined,” We cannot stop e-commerce as the buying habits of people have changed considerably in the last few years. The firms are destroying more jobs than they are creating by removing various layers in the business. Government must ensure that various layers in the business right from farming to the point of sale do not get destroyed so that people remain employed. It must ensure Minimum Operating Price (MOP) for small retailers and businesses to ensure their survival and put in place a vigilance mechanism to ensure the same.”

Applauding the proposed guidelines in the new e-commerce policy, he added, “Small traders have partially welcomed these amendments and they need to be educated about the proposed guidelines and its impact. I am of the view that the government is still soft on e-commerce portals and do not have a sharp focus on serving the interest of small businesses.”

The panel comprised of Mr. Abhay Raj Mishra, President of Public Response Against Helplessness and Action for Redressal (PRAHAR); Spokesperson from AIOVA (All India Online Vendors Association); Mr. Dhairyashil Patil, National President of All India Consumer Products Distributors Federation (AICPDF); Dr. PM Ganeshraam, Chief Founder Patron of AICPDF; Mr. Shriram Baxi, General Secretary, Federation of All India Distributors Associations (FAIDA); Mr. MM Sharma, Advocate, Head – Competition Law & Policy, from Vaish Associates Advocates Law and Mr. CH Krishna, President of Federation of All India Distributors Association (FAIDA).