To design the strict structure under which firms function, the government has suggested changes to the electronic commerce rules under the Consumer Protection Act 2020. The amendments, suitably underlined using track modifications, go beyond boosting consumer protection per se. The aim appears to be to control dominant players and the government has decided to squeeze its rule of e-commerce, taking on overseas titans such as Amazon and Flipkart-Walmart in specific, with implications for national retail majors namely Reliance. Nevertheless numerous industry experts are of the opinion that the new e-commerce rules as announced by the government will influence a widespread variety of companies, across sector, comprising the likes of Swiggy, Zomato, BigBasket, Ola, Uber and several others, raising their compliance burden.
The proposal takes birth at a time when big e-commerce marketplaces such as Flipkart and Amazon India are being examined by the Competition Commission of India (CCI) for suspected misuse of market supremacy and giving preferential treatment to sellers in which they hold indirect stakes. The CCI investigation also concentrates on deep-discounting exercises carried out by e-commerce marketplaces, which has led to grievances from offline vendors.
In June 2021, the Karnataka high court dismissed Flipkart and Amazon India’s appeal challenging CCI’s inquiry, stimulating the firms to appeal the order at a division bench of the court for relief. Although many new provisions are alike to what the government sought of social media companies through the Information Technology intermediary rules stated earlier this year, quite a few propositions in the e-commerce rules are targeted at rising accountabilities for online retailers for goods and services purchased on their platforms.
Primarily, the draft regulations published by the Consumer Affairs Ministry seek to clearly prohibit ‘specific flash sales’ or deep discounting by e-commerce firms. However, regular e-commerce flash sales are not forbidden. Flash sales or back-to-back sales which constrain customer preference, enhance prices and avoid a level playing field are not permitted. Such sales, braced with discounts that contained huge losses, were regular ways implemented by e-commerce giants to fascinate consumers to their marketplace and to products and brands in which they had a unique concern.
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