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E-commerce discounting may not be predatory

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The Confederation of All-India Traders has called for a probe into the business model and
trade practices of e-commerce companies

MUMBAI, OCTOBER 7: When e-commerce firms offer huge discounts, is it tantamount to

‘predatory pricing’? While brick and mortar retailers say it is predatory in nature, lawyers point out Sensex Nifty Gold Silver Crude Oil
that there may not be much basis in this charge as the former hold little or no inventory.
Sensex 26,227.76 44.21 -0.17% Oct 08,2014 12:04
An industry body, the Confederation of All-India Traders, called for a probe into the business model
and trade practices of e-commerce companies to find out how they offer huge discounts during the
ongoing festive season.

“Market-places should technically provide only technology. How have companies like Flipkart
achieved such a huge sale when they don’t own inventories? Clearly, they are hand-in-glove with the
sellers and would have made anywhere between 5 per cent and 20 per cent,” says Praveen Khandelwal,
of CAIT.

CAIT said it has written to Commerce Minister Nirmala Sitharaman to look into the working and
business model of e-commerce players. “We are mulling approaching the Competition Commission of
India (CCI) to look into the predatory pricing of e-commerce firms,” he added.
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Several major retailers also said, on condition of anonymity, that sales of footwear, electronics and gift Ads by Google
articles were showing a dip following e-commerce sales.

“The consuming class in India is in the age group of 18-30. Incidentally, they are also the ones who are
driving up sales in the online space. This may erode our customer base,” a retailer said.

When contacted, Future Group CEO Kishore Biyani said: “Our laws don’t allow us to sell below the cost
price. This is against fair trade practices,” though he declined to say whether the e-commerce sales had
any bearing on brick and mortar retailing.

On Monday, e-commerce firm Flipkart, that had offered big discounts on various product categories,
suffered from server glitches.

Kumar Rajgopalan, CEO, Retailers Association of India, said: “e-commerce players have always given
price sops and brick and mortar players are aware of this. Online stores are like a mall on the net.
Retailers themselves are looking at omni-retail channels. It is still too early to say if the discounting has
had any impact on sales.”
MOST POPULAR MOST COMMENTED
Predatory pricing is defined as ‘sale of goods or provision of services, at a price that is below the cost.
Gautam Shahi, senior associate at law firm J Sagar, said: “While analysing the online portals market in With Ciaz, Maruti takes on Honda, Hy undai
the case of Ashish Ahuja vs. Snapdeal and ScanDisk, it was the CCI’s opinion that Snapdeal is not
engaged in purchase and sale of products, and operates only as a web portal for other dealers.” Haldiram’s to add 150 stores through
Franchise India; to expand south and west
Shahi said that based on this order of CCI, if dealers offer their goods at below cost price but the web Gulf Oil Lubricants, M&M to tie up
portal itself is not doing so, then no case for predatory pricing can be made against them. M&M arm to acquire 51% stake in Peugeot
Motocy cles
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