22 May 2015

Exclusive agreements by e-commerce sites with sellers of goods/services, not anti-competitive

Considering various factors listed in Section 19(3) of the Competition Act, the Competition Commission of India (CCI) has held that ‘exclusive agreements’ by e-commerce portals with sellers of goods/services, to sell specified goods exclusively on those portals, does not lead to ‘Appreciable Adverse Effect on Competition’ (AAEC). It was hence held that said vertical agreements cannot be said to be anti-competitive under Section 3(4) of the Act. The Commission in holding so noted that while such arrangements did not create any entry barrier for new entrants and no existing players in the retail market were getting adversely affected, such online distribution channels of the parties (respondents) provided an opportunity to the consumers to compare the prices as well as the pros and cons of the product. The informant in this case had contended that due to such arrangements, the consumer was left with no choice in regards to terms of purchase and price of the goods and services.

While rejecting the plea of dominance, the Commission agreed with the view of the e-commerce portals that every product cannot be taken as a relevant market in itself. The informant in this context had contended that each of the opposing parties had 100% market share for the product in which it was exclusively dealing and therefore the same would lead to dominance. The Commission however on 23-4-2015 held that irrespective of whether e-portal market was considered as a separate relevant product market or a sub-segment of the market for distribution, the parties were not dominant.


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