COMPETITION LAW ISSUES IN E-COMMERCE

SECTOR

Dissertation submitted in part fulfilment for the requirement of the

Degree of

LL.M.

Submitted by Supervised by
GAGAN DEEP KOUR DR. ARUL GEORGE SCARIA

NATIONAL LAW UNIVERSITY

DELHI (INDIA)

2017
 DECLARATION BY THE CANDIDATE

I hereby declare that the dissertation entitled “COMPETITION LAW ISSUES IN

E-COMMERCE SECTOR” submitted at is the outcome of my own work carried

out under the supervision of Dr. Arul George Scaria, Assistant Professor, National

Law University, Delhi.

I further declare that to the best of my knowledge the dissertation does not contain

any part of work, which has not been submitted for the award of any degree either in

this University or any other institutions without proper citation.

New Delhi Gagan deep Kour

3rd June, 2017 Roll no. 30LLM 16

National Law University, Delhi

i
 CERTIFICATE OF SUPERVISOR

This is to certify that the work reported in the LL.M. dissertation entitled
“COMPETITION LAW ISSUES IN E-COMMERCE SECTOR”, submitted by
Gagan deep Kour at National Law University, Delhi is a bonafide record of her
original work carried out under my supervision. To the best of my knowledge and
belief, the dissertation: (i) embodied the work of the candidate herself; (ii) has duly
been completed; and (iii) is up to the standard for being referred to the examiner.

New Delhi (Dr. Arul George Scaria)

3rd June, 2017 Assistant Professor

National Law University, Delhi

ii
 ACKNOWLEDGEMENTS
Undertaking any project is a mountainous task in itself, and it requires able assistance
along the way to make it successful, interesting, motivating, professional and
learning. In this, I have been blessed with many people who have served as a light and
mentored me towards a successful realization of this dissertation. It is with utmost
humility and gratitude that I take this opportunity to recognize every one for their
invaluable inputs.

I wish to express my deepest gratitude and sincere regards to my respected mentor,

Dr. ARUL GEORGE SCARIA, for his constant help, guidance and encouragement
throughout the tenure of this dissertation. He has always been a source of inspiration
and his valuable suggestions and discussions have been instrumental to the success of
this work. This work would not have been feasible without his rigorous guidance. I
am highly indebted to him for providing constant and swift inputs despite his busy
schedule. He taught me the value of self-learning and sincerity. It has been a truly
humbling experience to work under him.

I further wish to express my gratitude to the entire NLU-D family especially Prof.
(Dr.) Ranbir Singh (Vice- Chancellor, NLU Delhi) and Prof. G.S. Bajpai (Registrar,
NLU Delhi) for providing all the facilities required for completion of this research. I
would also like to thank the Library staff of the National Law University, Delhi for
their constant support.

I would like to acknowledge the constant support extended by Gursimran Singh,

Suruchi Khanna and Manjit Sangwan, which motivated me to work harder at each
step. I would also like to thank my peers who provided me with new ideas and inputs
throughout the project, especially Shradha Sanjeev, Prathma Sharma and Ritika
Bharara.

Above all, I would like to thank my Parents, Mr. Surinder Singh and Mrs. Jasbir Kaur,
who have always trusted me and provided me with whatever I asked for. It is only due
to their endless love and blessings I could pursue my goals and successfully complete
this course. Last, but not the least, I would like to thank the almighty for showering
his blessings on me at every step.

iii
 LIST OF ACRONYMS & ABBREVIATIONS

AAEC Appreciable adverse effect on competition

ADCTA The All Delhi Computer Trader Association

AIOVA The All India Online Vendor Association

Anr. Another

App Application

Art. Article

ASSOCHAM The Associated Chambers of Commerce of India

B2B Business to business

B2C Business to consumers

C2C Consumer to consumer

CCI Competition Commission of India

CJEU Court of Justice of the European Union

COD Cash on delivery

DG Director General

DOJ Department of Justice

DIPP Department of industrial policy and promotion

EC European Commission

Ed. Edition

EMI Equated monthly installments

EU European Union

FCA French Competition Authority

iv
FCO Federal Cartel Office

FDI Foreign direct investment

FTC Federal Trade Commission

G2B Government to business

G2C Government to consumer

LCC Low cost carrier

MOP Market operating Price

OECD The Organisation for Economic Co-operation and Development

Ors. Others

OTA Online travel agents

PoD Print on Demand

RPM Resale price maintenance

Sec. Section

SSNIP Small but significant non-transitory increase in price

Sd card Secure digital card

TFEU Treaty on the Functioning of the European Union

USA United States of America

UK United Kingdom

v. Versus

WTO World Trade Organisatiom

v
 LIST OF CASES

1. Adidas Case Ref: B3-137/12

2. America Online, Inc. v. GreatDeals.Ne49 F.Supp.2d 851
3. Ashish Ahuja v. Snapdeal and Sandisk Corporation Case 17 of 2014
4. ASICS Case B2 – 98/11
5. Ball Mem’1 Hosp., Inc v. Mut. Hosp. Ins., Inc., 784 F.2d 1325
6. Belgium v. Commission, C 110/03
7. Bertelsmann/Havas / Bol Case no. IV/M.1459
8. Bertelsmann /Mondadori Case No. IV/M1407
9. BookLocker.com, Inc. v. Amazon.com, Inc650 F.Supp.2d 89 (2009)
10. CCI v. SAIL Civil Appeal No.7779 OF 2010
11. Coty Germany GmbH v. Parfümerie Akzente GmbH- Case C-230/16
12. Deepak Verma v. Clues Network Pvt. Ltd and ors Case 34 of 2016
13. Deuter Sports- Case 11 U 84/14
14. Ebay and Flipkart – Combination registration no C-2017/05/505
15. Europemballage Corporation and Continental Can Company Inc., Case 6/72
16. Gerlinger v. Amazon.com,Inc 311 F.Supp.2d 838 (N.D.Cal.2004)
17. Ghanshyam Dass Vij v. M/s Bajaj Corp. Ltd and ors. Case No. 68 of 2013
18. Jasper Infotech Pvt. Ltd. v. M/S Kaff Appliances Pvt. Ltd. Case no 61 of 2014
19. MCX Stock Exchange Ltd. v. National Stock Exchange of India Ltd. & ors.
Case no 13/2009
20. Mohit Manglani v. Flipkart India Private Limited & ors. Case 80 of 2014
21. Kickflip, Inc. v. Facebook, Inc. C.A. No. 12-1369-LPS
22. Otto/ Grattan.Case No. IV/M070
23. Pierre Fabre v. Autorité de la Concurrence. Case C-439/09
24. Pierre Fabre Dermo-Cosmétique SAS v. Président de l’Autorite de la
concurrence,EU:C:2011:649
25. Re eBay Seller Antitrust Litigation 545 F. Supp.2d 1027 (N.D. Cal. 2008)
26. Snapdeal and Alibaba- Combination Registration No. C-2015/08/301
27. Sonam Sharma v. Apple Inc. and ors. Case No. 24/2011

vi
28. Tanaka v. Univ. of S. Cal252 F.3d 1059
29. United States v. Microsoft Corp. 253 F.3d 34

vii
 LIST OF TABLES

Table Number Caption Page Number

1.1 Size of e-commerce 4

industry in India (includes
only B2C e-tail excluding
online travel and
classifieds)
1.2 List of current leading e- 5
commerce models in India

1.3 List of emerging Vertical 6

Specific e-commerce
companies in India

1.4 Channels used by retailers 63

for selling online

viii
 LIST OF FIGURES

Figure Number Caption Page Number

1.1 Number of Parcels 10

handled by India Post
per month
1.2 Various types of 11
business models

ix
 TABLE OF CONTENTS

TITLE PAGE
NO.

DECLARATION BY THE CANDIDATE i

SUPERVISOR’S CERTIFICATE ii

ACKNOWLEDGEMENTS iii

LIST OF ABBREVIATIONS iv-v

LIST OF CASES vi-vii

LIST OF TABLES viii

LIST OF FIGURES ix

CHAPTER 1 1-18

INTRODUCTION

1.1 OVERVIEW OF E-COMMERCE SECTOR 1

1.1.1 EVOLUTION OF E-COMMERCE 2

1.1.2SIZE OF THE E-COMMERCESECTOR 3

1.2NEW TRENDS/ TRENDS SUPPORTING E-COMMERCE 7

GROWTH

1.3VARIOUS TYPES OF BUSINESS MODELS 12

1.4 FDI GUIDELINES 15

1.5 RESEARCH QUESTIONS 18

1.6METHODOLOGY 18

x
CHAPTER 2 19-42

CONCEPT OF RELEVANT MARKET

2.1 GENERAL OVERVIEW OF THE CONCEPT OF RELEVANT 21-25

MARKET

2.1.1 INDIA 21

2.1.2EUROPEAN UNION 22

2.1.3 UNITED STATES 24

2.2 THE FRAMEWORK TO DETERMINE RELEVANT MARKET 25

2.3 CONCEPT OF RELEVANT MARKET IN REFERNEC TO E- 28-38

COMMERCE

2.3.1 EUROPEAN UNION 28

2.3.2UNITED STATES 32

2.3.3INDIA 35

2.4 EVOLVING A MORE COMPREHENSIVE APPROACH 39

CHAPTER 3- 43-77

POTENTIAL COMPETITION ISSUES IN E-COMMERCE

SECTOR

3.1 EXCHANGE OF INFORMATION 43

3.2 FREE RIDING 44

3.2.1 MARGINAL VALUE FOR ONLINE RETAILERS 46

3.3 PREDATORY PRICING 47

xi
3.4RESALE PRICE MAINTENENCE 52

3.5 EXCLUSIVE AGREEMENTS 57

3.6 SELECTIVE DISTRIBUTION AGREEMENTS 60

3.7 RESTRICTION WITH REGARD TO SALE ON 64

MARKETPLACES

3.8 ANTI-COMPETITIVE ISSUES IN PAYMENT THROUGH 68

DIGITAL WALLETS

3.9 CONCERNS POSED BY MERGERS AND ACQUISITIONS 71

CHAPTER 4 78-85

CONCLUSION AND RECOMMENDATIONS

BIBLIOGRAPHY xiii-
xxv

xii
 CHAPTER 1: INTRODUCTION

For today’s generation, equipped with laptops, computers, smartphones and internet,
everything is likely to be different from how it used to be for their parents, and so is
the way of shopping.1 Over the past 15 years, the internet has touched every aspect of
our life and has changed everything slightly or significantly. It has completely
changed the way we trade in goods and services.2Our parents could not have imagined
buying train or airline tickets by sitting at home. And now, can a person imagine
buying a new car or a laptop without spending hours on the internet doing research?
And shopping without browsing through those tons of options and huge discounts
available online? 3 Malls and chains have not disappeared, but they are not as relevant
as they used to be. The considerable rise in the number of, internet users, internet-
enabled devices, online payments, etc are some of the factors which have lead to the
development of e-commerce.

1.1 OVERVIEW OF E-COMMERCE SECTOR:

The WTO Ministerial Declaration on E-commerce defines e-commerce as the,

“production, marketing, distribution, sales or delivery of goods and services by
electronic means.”4

Electronic commerce is a type of business model, where buyers use internet to make
purchases and even for making payments.5 It allows conducting business through

1
E-commerce in emerging markets; The Economist; 05 March 2016 ; retrieved from
http://www.economist.com/news/leaders/21693925-battle-indias-e-commerce-market-about-much-
more-retailing-india-online, last accessed on 18-12-2016
2
Chris Nickson – “Has Online Shopping Made Life Easier?” ; 4 September 2016; retrieved from
http://www.atechnologysociety.co.uk/has-online-shopping-made-life-easier.html, last accessed on 17-
12-2016
3
Dave Roos; “The History of E-commerce”; retrieved from http://money.howstuffworks.com/history-
e-commerce.html, Last accessed on 02-01-2017
4
WTO, Work Programme on Electronic Commerce,1998 at 1.3, retrieved from
https://www.wto.org/english/tratop_e/ecom_e/ecom_e.htm , last accessed on 21-12-2016
5
E-Commerce: Purchasing and Selling Online; Ministry of Economic Development and Innovation,
Ontario; retrieved from http://www.gov.pe.ca/photos/original/IPEI_ebiz_ecomm.pdf, last accessed on
05-01-2017

1
electronic channels.6 The firms are able to reach the customers beyond their
geographical reach, and customers are able to choose from a variety of options
conveniently, delivered to their doorsteps. In other words, it is an opportunity for
businesses, firms and individuals to reach those customer bank or markets, which
otherwise they cannot reach.7

According to Goldman Sachs, the e-commerce market in India will breach the $100
billion mark by 2020.8 If all these factors and speculations are to be believed, India is
on route to becoming the world’s fastest growing e-commerce market.9India’s
visionaries have been looking up to China, whose e-commerce grew by almost 600%
in 4 years (between 2010 and 2014) making it the largest e-commerce market in the
world.10 Although with poorer population and weak infrastructure than China, India is
a difficult market for e-commerce, but still its prospects look favourable.11

1.1.1 EVOLUTION OF E- COMMERCE:

The evolution of e-commerce is unimaginable without Amazon and eBay. Although

the first successful e-commerce retailer was Dell, which launched its own unique
website, it was eBay and Amazon that changed the scenario drastically, by launching
a marketplace services. 12

The evolution of e–commerce in India can be broadly divided into two phases. 13First
phase was from 1995 to 2000, soon after the introduction of internet, and the second

6
Katherine Arline, What Is E-Commerce? Business News Daily, Feb 26, 2015 ; retrieved from
http://www.businessnewsdaily.com/4872-what-is-e-commerce.html , last accessed on 21-12-201
7
Claire Cottam; E-commerce; 16 UW-L Journal of Undergraduate Research 1, 4(2013)
8
Rohitashwa Prasad, Gerald Manoharan, and Nidhi Sahay; “Topical Issues in the Regulation of E-
commerce in India”; Legal Services Newsletter; Winter 2016; retrieved from
http://www.usibc.com/sites/default/files/Files/blog/LegalServices_Newsletter.pdf
9
Navin Bhatia ; “Internet, Smartphones, Investments Driving E-Commerce; 6 September, 2015;
retrieved from https://officechai.com/stories/internet-smartphones-investments-driving-e-commerce-
study/#sthash.lVlEcPDC.ulYM2oCz.dpbs, last accessed on 6-01-2017
10
“ China Eclipses the US to Become the World's Largest Retail Market” ; 18 August, 2016; Retrieved
from https://www.emarketer.com/Article/China-Eclipses-US-Become-Worlds-Largest-Retail-
Market/1014364, last accessed on 6-01-2017
11
India's Retail E-commerce Sector Is Small but Still Growing ; 15 August, 2016 ; retrieved from
https://www.emarketer.com/Article/Indias-Retail-E-commerce-Sector-Small-Still-Growing/1014342
12
Keith Eisenberg, Gaurav Gupta, Analysis of the expansion of e-commerce into India and growth
opportunities for Flipkart; 14 Journal of International Business and Law151( 2015)
13
Ernst & Young, Rebirth of e-Commerce in India, retrieved from
http://www.ey.com/Publication/vwLUAssets/Rebirth_of_e-Commerce_in_India/%24FILE/EY_RE-
BIRTH_OF_E-COMMERCE.pdf, last accessed on 7-01-2017

2
wave was after 2000, which lead to emergence of business models in India, based on
global business models and eventually an improvement in the ecosystem. 14 The first
wave saw the launch of job portals, matrimonial websites and B2B portals, but the
user base of such services was small due to lesser internet penetration, slow speed of
internet and lesser acceptance of using internet for shopping. 15 Due to such reasons,
1000 e-commerce sites saw their doom till 2000.16 Following this loss, the Indian e-
commerce went still till 2005.17

The second wave was marked by travel segment emerging as largest segment due to
the entry of low cost carriers (LCC) or budget airlines and the selling of their tickets
through online travel agents (OTAs).18 The success of online travel segment made
customers more comfortable in transacting online and hence paved way for online
retail.19

1.1.2 SIZE OF THE E-COMMERCE SECTOR:

Morgan Stanley, an American consultancy estimated that by 2020, the e-commerce

sales in India will rise to nearly $120 billion and that India will see a similar kind of
growth in online retail that China has seen over the past few years. 20

Another report by the Confederation of Indian Industry (CII) and Deloitte, released in
April 2016 estimate that the online retail sector in India is expected to be reaching
US$ 1 trillion (Rs 660,000 crore) by the year 2020.21 It also predicted that the sector
will grow by 6 times over 5 years, owing to factors like convenience, new-age
technology, larger reach and higher adoption rates.22

14
Id. at 12
15
Id. at 13
16
Jason Overdorf, Has Indian e-commerce really arrived? , September 2011, retrieved from
http://jasonoverdorf.blogspot.in/2011/09/has-indian-e-commerce-really-arrived.html, last accessed on
01-04-2017
17
Supra note 13 at 13
18
Ibid.
19
Ibid.
20
Mihir Dalal, The state of India’s online retail market, 7 July,2016,retrieved from
ww.livemint.com/Companies/Ig34ixeE1nJZAjMSl5Wg0O/So-what-is-the-state-of-Indias-online-retail-
market-asnyway.html
21
Confederation of Indian Industry (CII) and Deloitte , E-Commerce in India- A Game Changer for the
Economy,April2016; retrieved from
https://www2.deloitte.com/content/dam/Deloitte/in/Documents/technology-media-
telecommunications/in-tmt-e-commerce-in-india-noexp.pdf, last accessed on 9-01-2017
22
Ibid.

3
A report by the Retailers Association of India (RAI) in collaboration with property
consultant Knight Frank India Pvt. Ltd. had compared the online and offline retail
market shares in India. According to this report, share of e-commerce in retail is
expected to take a leap of 9% in 5 years i.e. from 2% in the year 2014 to 11% in year
2019; whereas the share of offline or physical retail is expected to reduce from 17% to
13% during the same time period.23

YEAR Size of e-commerce(in billion)

2013 $ 2.9

2014 $13.6

2015 $16

2018 $40.3

Table: Size of e-commerce industry in India (includes only B2C e-tail excluding
online travel and classifieds24

The market shares battle in e-commerce in the year 2016 was one amongst Snapdeal,
Flipkart and Amazon.25 Flipkart and Ola, (valued at $15 billion and $5 billion
respectively), along with share of Snapdeal (valued at $ 6.5 billion) have accounted
for 55% of the cash raised by all Indian start-ups in 2015.26 Rapid strides were made
by Amazon and Uber in 2016. Although Amazon emerged as one of the major
players, but Flipkart is still slightly ahead of Amazon, while Ola is ahead of Uber.27

The table below enumerates the leading e-commerce companies in India under
different business models:

23
Asit Ranjan Mishra, Mihir Dalal; Govt defines e-commerce marketplace rules, allows 100% FDI; 30
March 2016; retrieved from http://www.livemint.com/Politics/hglep85yZOQzChj6KRrrCK/Govt-
allows-100-FDI-in-e-commerce-marketplace-model.html, last accessed on 13-01-2017
24
Supra note 21 at 7
25
Sadhna Chathurvedula, Anirban Sen, E-commerce: Life after the boom, The Mint, December
16,2016, retrieved from www.livemint.com/Industry/X2GtZLcOYj3Z57Ynn3AyRP/e-commerce-Life-
after-the-boom.html, last accessed on 20-01-2017
26
Ibid.
27
Ibid.

4
 E-commerce Model Leading Companies

B2C e-commerce marketplace Amazon.com, Flipkart.com

BigBasket.com, FirstCry.com,
B2C e-commerce Inventory Led Zovi.com

B2C e-commerce Aggregator Uber.com, olacabs.com

C2C e-commerce Cloudacar.com, quickr.com, olx.in

Cloudbuy.com, Tolexo.com,
Amazonbusiness.com,
B2B e-commerce Industrybuying.com,
Power2sme.com,

Shoppers stop Ltd., Infiniti Retail

Omni-channel Retailers Ltd., Croma

Table: List of current leading e-commerce models in India28

The e-commerce in India has had a great impact on retailing itself. The chain stores
and the Shopping malls account for only about 1/10th of the total retail sales and the
combined sales of the top three e-commerce sites of India, Flipkart, Amazon and
Snapdeal have surpassed the combined sales of the 10 largest offline retailers in the
country.29

A huge population of around 1.25 billion, a rise in the number of mobile phone users
and internet penetration as well as increasing incomes, these factors are leading
towards making India one of the biggest e-commerce markets in the world.30 This

28
Supra note 21 at 9
29
Supra note 2
30
Anirban sen, Online retail firms get a reality check in 2016 ; Dec 27 2016 ; retrieved from
http://www.livemint.com/Companies/kT63brvGgto8sDKnk0PuxM/Online-retail-firms-get-a-reality-
check-in-2016.html, last accessed on 14-01-2017

5
growing success and popularity of the e-commerce companies have attracted many
new players into this market.

The following table displays the list of emerging e-commerce companies in specific
verticals in India.

Verticals Leading Companies

Online Travel
Online Real Estate
Online Fashion
Online Furniture
Online Food and grocery
Makemytrip.com, yatra.com,
cleatrip.com, goibibo.com
Magicbricks.com, 99acres.com,
commonfloor.com,
Housing.com
Jabong, Myntra, Zovi, yepme,
limeroad
Fabfurnish.com,Pepperfry.com,
urbanladder.com
Zomato.com, Foodpanda.in,
BigBasket, Grofers

TABLE: Indicative list of emerging Vertical Specific e-commerce companies in

India31

31
Supra note 21

6
1.2 NEW TRENDS/ TRENDS SUPPORTING E-COMMERCE
GROWTH:

An increase in the number of smartphone users as well as internet users is one of the
major trends that have affected the e-commerce market in a positive manner. India is
ahead of countries like Russian and Brazil, with an annual addition of approximately
25 million internet users.32In 2016, India had an internet user base of 400 million
whereas Brazil and Russia have 210 million and 130 million respectively internet user
base.33

Other than the factors such as convenience, wide range of options and attractive prices
and discounts, there are certain other new trends that are fueling the widespread
popularity of e-commerce. First one is the increase in the number of smartphone
users.34 A product, which earlier used to be a luxury can now be seen in almost every
person’s hand. With the increase in its use, the increase of internet has also increased,
as it can now be used conveniently almost everywhere and at all the time.35 A report
by Boston Consulting Group with Retailers association of India (RAI) states that
internet users are expected to increase from 200 million in 2014 to 600 million in
2020, and the smartphone users are expected to increase from 120-140 million in
2014 to 600-700 million in 2020.36Introduction of technologies like 3G /4G has
changed the way of browsing. Owing to this increase in users of smartphone and
internet, almost all the e-commerce websites have now launched their mobile phone
applications, known as “apps”.37So now the people can now not only browse through
their websites, but also the specially compressed apps anytime, anywhere. The
companies even offer discounts especially for app users, luring more customers to

32
India is the fastest growing e-commerce market: Study, Gadgets Now, May8, 2016; retrieved from
www.gadgetsnow.com/tech-news/India-is-the-fastest-growing-e-Commerce-market-Study, last
accessed on 15-01-2017
33
India's e-tailing growing fastest in the world, says ASSOCHAM-Forrester study, Business Standard,
May 9,2016, retrieved from http://www.business-standard.com/article/news-cm/india-s-e-tailing-
growing-fastest-in-the-world-says-assocham-forrester-study-116050900230_1.html, last accessed on
13-01-2017
34
Retailers Association of India and Boston Consulting Group, Retail 2020 : Retrospect, Reinvent,
Rewrite ; February 2015, retrieved from http://image-src.bcg.com/Retail-2020-Feb-2015-India_tcm21-
28775.pdf, last accessed on 19-01-2017
35
Supra note 12
36
Supra note 34
37
Athira A. Nair, The future of Indian e-commerce lies on the app route, March 14, 2016; retrieved
from https://yourstory.com/2016/03/indian-e_commerce-future-apps/, last accessed on 18-01-2017

7
download and use their app.38 Thus, this advent is slowly paving way for “M-
Commerce”. Many market leaders like Flipkart, Myntra, and Amazon have launched
their mobile apps along with desktop sites. According to a report by venture capital
firm KPCB, leading e-commerce companies state that 70-75% of their traffic comes
from mobile phones and the report also states that in mobile based e-commerce, India
has the highest sales globally i.e. 41%.39

Due to different circumstances in western and Asian nations, and the recently released
FDI Guidelines, the major players of e-commerce cannot use the exact strategies for
business as they have used in the West. So now the companies offer a range of
services, not only to customers, but also to sellers, to lure businesses and increase the
number of sellers on their sites. For example, Flipkart not only teaches sellers about
managing peak sales during festive seasons, but also advises fashion brands on trends
and production.40 Amazon has announced a travelling studio on wheels, a rewards
programme for sellers and has also launched a global initiative-Amazon Launchpad.41

Another help these websites are offering is helping small businesses in accessing
credit easily. 42For example, Amazon displays a list of short term loans to a seller, at
rates calculated using the data from transactions of that seller. Snapdeal tied up with
SBI and announced in January that the SBI would approve loans of up to $37,000
instantly, by accessing the platform performance data on sellers’ worthiness. 43

38
Abhishek Chakraborty; “Online stores woo mobile app users with discounts”; 30 April, 2014;
retrieved from http://indianexpress.com/article/business/companies/online-stores-woo-mobile-app-
users-with-discounts/
39
Ronald Menezes; E-commerce in India to reach $101.9 billion by 2020; government initiatives to
help growth, May 17,2016; retrieved from http://www.exchange4media.com/digital/ecomm-in-india-
to-reach-$101.9-billion-by-2020;-government-initiatives-to-help-growth_64489.html, last accessed on
18-01-2017
40
Online retailing in India- The great race; The Economist; March 05,2016 ; retrieved from
http://www.economist.com/news/briefing/21693921-next-15-years-india-will-see-more-people-come-
online-any-other-country-e-commerce, last accessed on 17-01-2017
41
Varun Jain, Amazon India launches its global program to help Indian start-ups, Economic Times,
Dec 5,2016; retrieved from http://retail.economictimes.indiatimes.com/news/e-commerce/e-
tailing/amazon-india-launches-its-global-program-to-help-indian-start-ups/55813497, last accessed on
20-01-2017
42
Raghu Krishnan; Indian e-commerce platforms help sellers get easy loans to aid growth; Business
Standard, Dec10,2015, retrieved from http://www.business-standard.com/article/companies/indian-e-
commerce-platforms-help-sellers-get-easy-loans-to-aid-growth-115120901007_1.html, last accessed on
20-01-2017
43
SBI partners Snapdeal to offer loans to e-commerce sellers, India Today, January 15, 2016; retrieved
from http://indiatoday.intoday.in/story/sbi-partners-snapdeal-to-offer-loans-to-e-commerce-
sellers/1/571569.html, last accessed on 19-01-2017

8
Once a site has a number of sellers, the second challenge is the anxiety of the
customer about payment. Other than online prepayment, the websites have started
offering various other modes of payment. Customers are often allowed to pay offline
i.e. Cash on delivery, or even through EMIs. The option for Cash on delivery has been
introduces by sellers to overcome the mistrust of buyers about the payment by
allowing them to pay only when they have safely received the products they ordered.

Another trend of payment which has evolved and developed with the e-commerce
sector is the payment through wallets.44 These wallets provide hassle free payment
solutions and cash back to the users e.g. Airtel money, Mobiwik, Freecharge, Paytm,
etc. These modes have become so famous that Paytm has 120m digital wallet
accounts, nearly six times India’s number of credit cards.45

Another trend that has added to the popularity of online retail is option to customize.
Earlier, people used to buy the things as they were served by the companies. But now
many online retailers have started offering customization as an option. Today, not
only can a person order a customized product online, but can even design it from
scratch. For e.g., NikeIDs, Tiesta shoes, printvenue.com, etc.

Making a safe and quick delivery is one of the most important aspects of online retail.
After a purchase has been made by a customer online, the next task is to get it
delivered. For this, many new trends have been emerging in delivery segment. The
companies either tie up with local courier services or have its own specialised
delivery channel; as such large number of parcels to be delivered cannot be left solely
to Indian post or just one courier service.46These companies have also started offering
“Try and Buy” and needs a delivery person who can wait till the customer tries on the
product. So they have started building new networks for this special service. For
example, In Mumbai, Flipkart has started using the network of Lunch delivery men or
dabbawallas, to deliver parcels when they pick up customers’ dabbas or lunch

44
PwC’s Strategy&, Kevin Grieve, Mark Flamme, 2015 Payments Industry Trends, retrieved from
http://www.strategyand.pwc.com/trends/2015-payments-trends, last accessed on 20-01-2017
45
Sunny Sen, Paytm targets credit and debit cards in big offline retail push, Hindustan Times, Feb 17,
2016, retrieved from http://www.hindustantimes.com/business/paytm-targets-credit-and-debit-cards-in-
big-offline-retail-push/story-e1yJ2w4pi6Nbt7PI2WZYHM.html, last accessed on 13-02-2017
46
Nivedita Mookerji, Mansi Taneja, Reality check for e-tail deliveries via India Post, Business
Standard, July 18, 2015, http://www.business-standard.com/article/companies/india-post-does-last-
mile-delivery-but-caps-it-at-5kg-115071800566_1.html , last accessed on 12-02-2017

9
boxes.47 Amazon also has programme where customers can order groceries online and
then the company will have them delivered from the nearest Grocery store or kirana.48
Grofers and Big Basket also work on the same line.

The “delivery” aspect of the e-commerce sector has also paved way for start-ups,
dealing in just deliveries. E.g. A Gurugram based startup, Delhivery has hired more
than 15,000 staff, from delivery boys to developers to executives.

Figure: Number of Parcels handled by India Post per month 49

Some of these websites are now available not only in English, but in local languages
as well. Snapdeal launched its multilingual interface in January 2014 in Hindi and

47
Dabbawalas to now help deliver goods from Flipkart, Times of India, April 10, 2015; retrieved from
http://timesofindia.indiatimes.com/city/mumbai/Dabbawalas-to-now-help-deliver-goods-from-
Flipkart/articleshow/46871367.cms, last accessed on 12-02-2017
48
Sayan Chakraborty, Amazon launches grocery deliveries in Bengaluru, Feb 4, 2016; retrieved from
http://www.livemint.com/Industry/OqUnKDAjBQGpCb23mr3HtM/Amazon-launches-grocery-
deliveries-in-Bengaluru.html, last accessed on 12-02-2017
49
Supra note 21 at 10

10
Tamil languages and at present is available in English, Hindi, Telugu, Gujarati, Tamil,
Marathi, Bengali, Kannada, Malayalam, Oriya, Assamese, and Punjabi. 50

So, in this way, the e-commerce companies are not only generating profit and revenue
for themselves, but also for logistic companies, payment gateways and delivery
companies.

In a nutshell, over the last twenty years, e-business has completely revolutionized
retail. It has had a major impact on the retail industry.51It has gone from being a non-
existent business model to a probable threat to the offline and traditional retail. The e-
commerce industry hasn’t just grown, but has transformed and evolved over time to
meet the changing requirements of the buyers.52

Amazon is the world’s dominant player and has a market value of 341 billion U.S.
dollar and a market capitalization of $272.3 billion (as on Feb 2016). This is more
than the combined market capital of the top six Indian companies- HDFC, TCS, ITC,
Reliance, Sun Pharmaceuticals and Infosys.53 It was suggested by Euromonitor that
in developing countries, offline retail sales will increase by 10% whereas online sales
with jump up by 40%54. When one looks at all these factors, it is clear that there is a
movement of business from brick and mortar shops or offline retail to online
platforms.

50
Supra note 40
51
Rachana Ghayal, Madhavi Dhingra; Impact of E-Business on the Retail Market: A Short Study ;
EEC 560(2012)
52
Steve Olenski, Evolution of E-commerce, Forbes, Dec 29 2015, retrieved from
http://www.forbes.com/sites/steveolenski/2015/12/29/the-evolution-of-e-commerce/2/#7fdbff9f67e2,
last accessed on 12-02-2017
53
Dr. Ruzbeh J Bodhanwala, E-commerce mergers and acquisitions in India,
http://buzz.flame.edu.in/business/e-commerce-mergers-and-acquisitions-in-india/, last accessed on 12-
02-2017
54
Ibid.

11
1.3 VARIOUS TYPES OF BUSINESS MODELS:

55

(i) Business to business (B2B):

The Federal Trade Commission’s report titled “Competition Policy in the World of
B2B Electronic Marketplaces,” defined B2B electronic marketplaces as “a distinct
system of suppliers, distributors, commerce services providers, infrastructure
providers and customers that use the Internet for communications and transactions.”56

When transactions take place between a manufacturer-wholesaler, or manufacturer

retailer, or retailer-wholesaler, the model is referred to as B2B (between business
enterprises).57It is a transaction between two companies, wherein one company sells
its goods and services to another company who in turn sells it to the final customer. A
B2B e-commerce marketplace is exactly what it sounds like: brands sell their products

55
Business Models in E-Commerce, March 31, 2015; retrieved from http://www.ecbilla.com/e-
commerce-articles/e-commerce-trends/business-models-in-e-commerce233.html, last accessed on 13-
02-2017
56
Federal Trade Commission, Entering the 21st Century: Competition Policy in the World of B2B
Electronic Marketplaces, October 2000; retrieved from https://www.ftc.gov/reports/entering-21st-
century-competition-policy-world-b2b-electronic-marketplaces, last accessed on 13-02-2017
57
Mandy Movahhed, B2B E-Commerce Models :Key Differences between Direct and Marketplace,
June 10, 2015, retrieved from https://www.linkedin.com/pulse/b2b-e-commerce-models-key-
differences-between-direct-mandy-movahhed, last accessed on 13-02-2017

12
wholesale in an online marketplace right alongside their competitors.58 Most of these
transactions take place in inventory management (i.e., managing order-ship-bills
cycles), purchase order processing, payment management (e.g., electronic payment
system or EPS) and distribution management.

Examples of companies engaged in B2B include CommerceOne, IBM, Ariba, Oracle,

Staples.com, Water2Water, e-Steel, and Covisint.com.

(ii) Business to consumer (B2C)

This is the most known business model of e-commerce. In this model, business
enterprises directly deal with end consumers, without any intermediaries. It is targeted
mainly to individual consumers, as opposed to businesses and can also be termed as
“a retail version of e-commerce.”59 The goods are exhibited by companies on the
website and the interested consumers can view, order and purchase those goods.
Examples of companies engaged in B2C include eBay, Flipkart, Amazon, Snapdeal
and mySimon.

(iii) Consumer to business (C2B):-

It is the reverse of B2C model. It is an online exchange where consumers themselves

approach the businesses or companies through websites.60 Here, the consumer uses a
website having multiple business entities for a particular service. He places his own
price or gives an estimate of how much he is willing to spend for that service, and
then leaves it to the service providers or companies to accept or reject it.61 The
companies can review if they are willing to fulfil his requirement within that given
amount and can then approach the customer.62 Examples of companies engaged in
C2B include monster.com, shineonline etc.

58
Ibid.
59
Electronic Marketplaces, EXECLSUM 378, December 2016
60
Rania Nemat, Taking a look at different types of e-commerce, 1 World Applied Programming
Journal, 100, 102(2011)
61
Ibid.
62
Helga Moreno, Different types of e-commerce, retrieved from
www.templatemonster.com/blog/different-types-of-e-commerce/, last accessed on 14-02-2017

13
In some cases, the customers can also provide services in terms of information and the
companies use them.63For example product review by consumers, because Consumer
feedback or a review provides an influential value for a company providing its goods
or services on an e-commerce site and is an important means to convince potential
buyers.

Examples of such companies include trip advisor, mouthshut, etc.

(iv) Consumer to Consumer (C2C):

In C2C business model, two individuals can conduct business or transactions amongst
themselves directly, via a website. A consumer wishing to sell his goods like
furniture, property, cars, etc. provides information on the website. Any person willing
to buy such good can see the information and buy the product from the seller. 64 In
such transactions, the products sold are often used products.65 These transactions are
generally done through sites offering classifieds, forums or auctions.66 For example,
Quickr, OLX, etc. are some of the websites that provide a platform to such
consumers.

(v) Government-to-Business (G2B):

In this model, the government uses websites to approach business entities.67 It is an

online interaction between government (local and central) and the business sector. It
is used to support tenders, application submissions, auctions, etc. Examples of
companies engaged in G2B include investment.gov.eg, www.ida.gov.eg,
www.bis.gov.uk, etc.

63
Katherine Arline, What is the concept of C2B?, BusinessNewsDaily, January 2, 2015, retrieved from
http://www.businessnewsdaily.com/5001-what-is-c2b.html, last accessed on 02-04-2017
64
Supra note 55
65
Cudjoe Dan, Consumer-To-Consumer (C2C) Electronic Commerce: The Recent Picture,
International Journal of Networks and Communications, Vol. 4 No. 2, 2014, pp. 29-32. doi:
10.5923/j.ijnc.20140402.01.
66
Supra note 59
67
Rhoda C. Joseph ,GOVERNMENT-TO-BUSINESS (G2B) PERSPECTIVES IN E-GOVERNMENT
,2013 at pg. 2, retrieved from
https://pdfs.semanticscholar.org/c04f/9ae448399f4093b14119f6cf3af126f22eeb.pdf, last accessed on
05-04-2017

14
(vi) Government to Citizen (G2C):

The G2C model has been is used to create a link between Government and citizens. IT
helps a citizen to raise a request for a service from the government.68 The main motive
of this model is to reduce the time for addressing the requests of the citizens by the
government. Services like Marriage certificate, registration for birth, death
certificates, etc can be provided.69 Examples of such companies include Taxonweb.

1.4 FDI GUIDELINES:

The guidelines relating to Foreign Direct Investment in e-commerce issued by the

Department of Industrial Policy and Promotion (DIPP) defines e-commerce as
“buying and selling of goods and services including digital products over the digital
and electronic network.” 70
These guidelines regarding FDI in e-commerce were
issued on March 29, 2016 vide Press Note No. 3 of 201671 and can be summarized
into following main points:

(i) FDI in Inventory and Marketplace based model:

Para 2.2 of the FDI Policy, 2016 series lays down guidelines for FDI in two models of
e-commerce.72 It states that 100% FDI is permitted in Marketplace model 73, whereas
the same is not permitted in inventory based model of e-commerce.74So, the e-
commerce companies with FDI cannot use an inventory based model, where they are
the owner as well as the seller of the goods being sold through the website.

68
Tutorials Point, E-commerce Business Model, retrieved from
https://www.tutorialspoint.com/e_commerce/e_commerce_business_models.htm, last accessed on 05-
04-2017
69
Supra note 55
70
Guidelines for FDI on e-commerce; Press note 3(2016), Para 2.1 (i), retrieved from
http://dipp.nic.in/English/acts_rules/Press_Notes/pn3_2016.pdf
71
Seema Jhingan, Neha Yadav, India: Guidelines For FDI In E-Commerce, April 8,2016, retrieved
from
http://www.mondaq.com/india/x/480912/Inward+Foreign+Investment/Guidelines+For+FDI+In+E-
commerce, last accessed on 15-02-2017
72
Guidelines for FDI on e-commerce; Press note 3;2016; retrieved from
http://dipp.nic.in/English/acts_rules/Press_Notes/pn3_2016.pdf
73
Supra note 66 at Para 2.1(iv): “Marketplace based model of e-commerce means “providing of
information technology platform by an e-commerce entity on a digital and electronic network to act as
a facilitator between buyer and seller.”
74
Supra note 66 at Para 2.1 (iii) : “Inventory based model as “an e-commerce activity where inventory
of goods and services is owned by the e-commerce entity and is sold to the consumers directly.”

15
(ii) FDI in B2B and B2C Model:

The 2016 guidelines have recapitulated the 2015 FDI Policy circular, which states that
upto 100% FDI is permitted under B2B activities in e-commerce.75 However FDI is
not permitted in B2C model of e-commerce, except in certain mentioned
circumstances.76

(iii) Other Conditions:

The marketplace entities will not have ownership over the inventory. Such an act
would render the entity into inventory based model of e-commerce. However,
marketplace can provide support to sellers in logistics, call centre, order fulfillment,
warehousing, collection of payment, etc. 77

It also lays down that an e-commerce entity will not be permitted to carry out more
than 25 per cent of the sales taking place through its marketplace from one vendor or
its group companies.78 So, Flipkart is now forced to limit the sale from WS Retail on
its website (which is a subsidiary of Flipkart), which generated more than 25% of its
sale and in which Flipkart holds majority stake.79 Similarly, Amazon will have to
limit sales from Cloudtail, which has generated more than 40% of its sales.80

The guidelines also stipulate that "[e]-commerce entities providing marketplace will
not directly or indirectly influence the sale price of goods and services and shall
maintain level playing field."81 This has been aimed to address the ongoing dispute
between online and offline retailers, regarding unsustainable discounts and allegations
of predatory pricing against the marketplace entities and imposes a duty on these
entities to maintaining a level playing field. In other words, marketplace entities are

75
Consolidated FDI Policy 2015, Para 6.2
76
Subjected to the conditions provided in FDI policy
77
Government permits 100 per cent FDI in e-commerce, March 29, 2016, The Hindu, retrieved from
http://www.thehindu.com/business/Industry/govt-permits-100-per-cent-fdi-in-online-market-
places/article8409495.ece, last accessed on 15-02-2017
78
India: 100 % FDI In E-Commerce Marketplace – DIPP Defines The Rules, 23 May 2016, retrieved
from http://www.mondaq.com/india/x/493562/Inward+Foreign+Investment/100+FDI+In+E-
commerce+Marketplace+DIPP+Defines+The+Rules, last accessed on 15-02-2017
79
Fatima sheikh, 100% FDI in e-commerce marketplace: If discounts are restricted, sector will never
be the same, 30 March 2016; retrieved from http://www.firstpost.com/business/decoder-100-fdi-in-e-
commerce-will-shake-up-the-sector-but-is-not-all-that-revolutionary-2702590.html, last accessed on
15-02-2017
80
Supra note 23
81
Supra note 72 at Para 2.3.(ix)

16
expected to act only as a platform, they should not influence the prices or any other
terms of transactions.82

Many of the major e-commerce players in India, like Snapdeal, Flipkart, Myntra, etc.,
have claimed to have implemented the marketplace model of e-commerce, acting only
as a platform only as a platform for buying and selling. The e-commerce websites
have started working with new sellers, to comply with FDI guideline of maximum
25% contribution by single seller. Myntra has a new seller- Tech Connect Retail Pvt.
Ltd, and Flipkart, has started working with four new sellers to meet the norm.83

Inspite of this, the brick-and-mortar (offline) retailers assert that these online retailers
are still engaging themselves in retail activities and not acting as only marketplaces in
actual sense, and hence are violating the existing regulations.84

On the one hand, the e-commerce has lead to numerous advantages for the consumers
in terms of options, prices and convenience; and on the other hand, the brick and
mortal retailers are feeling threatened, hereby raising competition issues. The e-
commerce market has been facing a lot of competition law related allegations like
price discrimination, predatory pricing, etc., which can cause appreciable adverse
effects on the competition.85 For examining the competition related issues in this
sector, one of the fundamental questions to be answered is whether e-commerce forms
a distinct relevant market, or whether it forms a new retail channel within the same
retail market.86 It is interesting to note in this regard that some of the decisions from
the competition authorities in India, for example in Ashish Ahuja v. SnapDeal and
87
Another, have considered e-commerce portals just as an additional distributional
channel for retail, and not as a distinct market.88As one can imagine, implications of
this approach, from the competition law perspective, are enormous. In this context, it
82
Supra note 72
83
Mihir Dalal, Online retailers back with discounts despite FDI rules, 8 August 2016, retrieved from
http://www.livemint.com/Companies/yiq4ZtOuT9WLtmhi30dVtK/Discounts-are-back-at-e-commerce-
firms-despite-FDI-rule.html, last accessed on 17-02-2017
84
Supra note 8
85
Ashish patel,” Major Competition Law Issues in E-Tail Market”, 2 International Multidisciplinary
Research Journal, June 2015
86
Aleksandra Belousova, Relevant Market: the application to the E-commerce area in the EU, Thesis
for Aarhus School of Business, 2010
87
Case No. 17 of 2014, at paragraph 16, decided on 19th May, 2014
88
Divye Sharma, India: Competition Law And E-Commerce: A Concern For The Future, 27 May,2015,
retrieved from
http://www.mondaq.com/india/x/400368/Antitrust+Competition/Competition+Law+And+E-
commerce+A+Concern+For+The+Future, last accessed on 17-02-2017

17
is important to look at how other jurisdictions have approached this issue. The E.U.
has addressed some aspects of e-commerce in the Block Exemption Regulation on
Vertical Restraints 2790/1999.89Also a sector enquiry on e-commerce has been taken
90
up by European commission. Although the Government of India has released FDI
guidelines for e-commerce, it is pertinent to mention here that the jurisdiction of
competition commission of India is limited i.e. it can only punish for the violation of
the provisions of The Competition Act. Hence those who violate these guidelines
cannot be penalised by CCI.91

Through this dissertation, the researcher will make an attempt to examine whether the
present laws in India are optimal for addressing of the competition related concerns in
the e–commerce sector in India. The researcher will attempt this by specifically
looking at the following research questions:

1. Whether the e-commerce is a distinct market or whether it is part of the broader

retail market, for the purpose of identification of relevant markets?

2. What are the major competition law related concerns prevailing with regard to the
e-commerce sector?

3. Are the existing rules and regulations the optimal ones for addressing competition
issues in the current circumstances in India?

METHODOLOGY:

The researcher will be using the doctrinal method for this research. The researcher
will rely on both primary as well as secondary sources. Considering the fact that
competition is a relatively new regime in India, the researcher also aims at analysing
the judgements given by Competition authorities not only in India but also in USA
and European Union, and the laws prevailing in these jurisdictions for the purpose of
this study.

89
European Union, The Vertical Restraint Block Exemption and Guidelines, 2010
90
COMMISSION DECISION initiating an inquiry into the e-commerce sector pursuant to Article 17
of Council Regulation (EC) No 1/2003, Initiated on 6 May 2015
91
Cyril Shroff , Rahul Goel, Online-Offline Parity, Indian Express; 4 August , 2016 ; retrieved from
http://indianexpress.com/article/opinion/columns/rise-in-e-commerce-raises-competition-issues-
2952256/, last accessed on 18-02-2017

18
 CHAPTER 2: CONCEPT OF RELEVANT MARKET

As discussed in the previous chapter, the emerging wave of e-commerce has changed
the dynamics of many businesses and the retail sector in the past few years. While
they have brought in numerous advantages for the consumers, they are considered as a
threat by many brick and mortal retailers.1

For examining the competition related issues in this sector, one of the fundamental
questions to be answered is whether e-commerce forms a distinct relevant market or is
a part of the traditional retail channel, with both online and offline retail lying within
2
the same market. One argument in this regard is that the products sold online are
often available offline as well, so both online and offline markets should be
considered as a part of same relevant market. On the other hand, there exists another
argument that due to the difference in the shopping experience, delivery options,
payment mode, etc, online market should be treated as distinct relevant market.3
Defining the relevant market is a very vital aspect of any antitrust complaint. The way
in which the relevant market for a particular product or service is defined in context of
e-commerce firms ultimately decides whether the company will be liable for any
competition law infringement or not.

In any antitrust case, a relevant market must be properly alleged. Failure to define
such relevant market where competition is allegedly affected, may lead to dismissal of
such case.4 For example in Tanaka v. Univ. of S. Cal., it was held that, “[t]he failure to
identify a relevant market is a proper ground for dismissing a claim.”5 There have
been instances where the claims relating to online advertisements were dismissed due

1
Mihir Dalal, Suneera Tondon; E-commerce boom hurts brick-and-mortar retailers ; March 2014;
retrieved from http://www.livemint.com/Industry/f6eARBcJOWrTZTzuDcZZzI/E-commerce-boom-
hurts-brickandmortar-retailers.html; Last accessed on 20-01-2017
2
Aleksandra Belousova, Relevant Market: the application to the E-commerce area in the EU, Thesis
for Aarhus School of Business, 2010, at pg. 2, retrieved from http://pure.au.dk/portal-asb-
student/files/9751/Final_thesis_Relevant_Market_the_application_to_the_E-
commerce_area_in_the_EU_.pdf; Last accessed on 13-02-2017
3
Vidhi Madaan Chadda; Competition law and e-commerce industry: Predicting the future for India, 5
Abhinav International Monthly Refereed Journal of Research in Management & Technology 8, 11
(May, 2016)
4
D.J. Baker and Christopher Harris, Antitrust law issues—Relevant market, 14 Bus. & Com. Litig.
Fed. Cts.at 152.10 (4th ed.), December 2016
5
252 F.3d 1059, 1063 (9th Cir. 2001)

19
to failure to assert the relevant market in the case.6 The case of America Online, Inc.
v. GreatDeals.Net is one such example.7 But there are certain cases where the claims
were recognized by courts and relevant product market in this context was properly
alleged. For example in re eBay Seller Antitrust Litigation, the court recognised
market for online auctions as relevant product market.8

Another dimension of relevant market is relevant geographic market. But due to the
non-geographical nature of internet, the courts have relied dominantly and exclusively
on relevant product market for the purpose of assessing relevant market. 9 Other than
the above mentioned cases of re eBay, the court has determined the relevant market
solely on the basis of the relevant product market in other cases such as Kickflip, Inc.
v. Facebook, Inc.10, BookLocker.com, Inc. v. Amazon.com,11 etc. All these cases have
been discussed further in the chapter.

Although the e-commerce sector is at a budding stage, but it has attracted a lot of
attention and hence put under a scanner of the regulators.12 With the kind of
popularity, growth of investments and growth rate of the sector in general, various
offline retailers have shown their discontentment with the lack of regulation in this
sector. The Competition Commission of India (CCI) has also started to look into
various allegations posed against major e -commerce players like Snapdeal13, Flipkart,
Myntra, etc.14

6
Tanaka v. University of Southern California, 252 F.3d 1059, 1063, 154 Ed. Law Rep. 788, 9th Cir.
2001
7
49 F.Supp.2d 851
8
545 F. Supp.2d 1027 (N.D. Cal. 2008)
9
Supra note 6
10
C.A. No. 12-1369-LPS
11
650 F.Supp.2d 89 (2009)
12
Supra note 6. at 7
13
Ashish Ahuja v. Snapdeal and SanDisk Corporation, Case No. 17 of 2014
14
Mohit Manglani v. Flipkart India Private Limitedand ors., Case No. 80 of 2014

20
2.1 GENERAL OVERVIEW OF CONCEPT OF RELEVANT
MARKET

2.1.1 INDIA

Demarcation of a “relevant market” is very essential for the purpose of applying

competition law and adjudicating competition law concerns. The conduct of a market
player can be reviewed only after defining a particular market i.e. the relevant market,
in which that player is working. In the Indian context, the relevant market has been
defined under Section 2 of the Competition Act, 2002.

The act defines Relevant market as, “the market which 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.”15

Since the above definition defines relevant market in relation to relevant product
market and relevant geographic market, it can be concluded that determining a
relevant market is based upon two basic dimensions - relevant geographic market and
relevant product market. Also, Section19 (5) of the act specifically mentions that
“[f]or determining whether a market constitutes a “relevant market” for the purposes
of this Act, the Commission shall have due regard to the relevant geographic market
and relevant product market.”

Relevant geographic market is explained under the act as, “a market comprising the
area in which the conditions of competition for supply of goods or provision of
services or demand of goods or services are distinctly homogenous and can be
distinguished from the conditions prevailing in the neighbouring areas.”16Section
19(6) enumerates the factors that should be given due consideration while
determining relevant geographic market. The factors are as follows:

(a) regulatory trade barriers;

(b) local specification requirements;

(c) national procurement policies;

15
The Competition Act, 2002, Sec 2(r)
16
Id. at Sec 2(s)

21
(d) adequate distribution facilities;

(e) transport costs;

(f) language;

(g) consumer preferences;

(h) need for secure or regular supplies or rapid after-sales services.

Relevant product market is defined as “market comprising all those products or

services which are regarded as interchangeable or substitutable by the consumer, by
reason of characteristics of the products or services, their prices and intended use.”17

Section 19(7) mentions the factors that the commission shall give due regard to, while
determining relevant product market and they are as follows:

(a) physical characteristics or end-use of goods;

(b) price of goods or service

(c) consumer preferences;

(d) exclusion of in-house production;

(e) existence of specialised producers;

(f) classification of industrial products.

Although the act provides the definition of the relevant market but does not provides a
straight jacket formula for determining the relevant market.

2.1.2 EUROPEAN UNION:

The above definitions in the Indian Competition Act are very similar to the article 101
and 102 of TFEU (previously Article 81 and 82).18

The concern about the concept of relevant market in EU was first raised in
Continental Can case.19 After 25 years of due deliberation and experience, following
17
Supra note 15 at Sec. 2(t)
18
Competition law in European Union can be traced back to EC Treaty

22
the “principle of transparency”20, a Commission notice was issued by European
Commission(hereinafter referred to as Notice) with the purpose of explaining as to
how the concept of relevant market is applied by the Commission while dealing with
cases related to Competition law.21 This has been, till date, the most important
document throwing light on delineation of a market.22 It has been promoted and
followed widely at national as well as EU level. 23

The notice analyses both dimensions of a relevant market, i.e. relevant product
market, as well as the relevant geographic market. The notice clearly states that the
context in which the term market is used for the purpose of competition law is
different from the context in which the term is used in other spheres. 24 The definitions
of the relevant market explained in the notice are influenced by the experience of the
Commission as well as from the decisions of the Court of First Instance and the Court
of Justice.25

Part II of the notice deals with the definition of the “Relevant Market”. It defines
‘Relevant product market’ as follows:

“Relevant product market comprises all those products and/or services which are
regarded as interchangeable or substitutable by the consumer, by reason of the
products' characteristics, their prices and their intended use’.26

The notice defines the ‘Relevant geographic market’ as: “[c]omprising the area in
which the undertakings concerned are involved in the supply and demand of products
or services, in which the conditions of competition are sufficiently homogeneous and

19
Case 6/72, Europemballage Corporation and Continental Can Company Inc. v. Commision [1973],
ECR 215.
20
According to the opinion of the Advocate General R.J. Colomer in the case C-110/03 (Belgium v.
Commission), point 44; “Transparency is concerned with the quality of being clear, obvious and
understandable without doubt or ambiguity.”
21
Commission Notice on the definition of the relevant market for the purposes of Community
competition law; (97/C 372/03)
22
David Jackson ;“Defining the Relevant Market in EU Concentration Cases – Applied to the plate
heat exchanger industry”; Master Thesis; Fall 2010; pg. No. 18 retrieved from
http://lup.lub.lu.se/luur/download?func=downloadFile&recordOId=1769074&fileOId=1788595,
accessed on 10-02-2017
23
Id. at 19
24
Supra note 19 at 3
25
Supra note 20
26
Supra note 19 at 7

23
which can be distinguished from neighbouring areas because the conditions of
competition are appreciably different in those area”.27

Therefore, a relevant market can be defined by a combination of relevant product

market and relevant geographic market, within which a given issue of competition
law is to be assessed.28

2.1.3 UNITED STATES

Under the Sherman Act, 1890 “relevant market” has not been defined specifically.
The Merger Guidelines that were introduced by DOJ (Department of Justice) and FTC
(Federal Trade Commission) talks about Product market and also lays down various
tests that are used to determine product market29.According to Para 4.1 of the
guidelines, “When a product sold by one merging firm (Product A) competes against
one or more products sold by the other merging firm, the Agencies define a relevant
product market around Product A to evaluate the importance of that to competition.
Such a relevant product market consists of a group of substitutes including Product
A.”30

Para 4.2 of the guidelines talk about geographic market. It mentions that geographic
market depends on various factors such as supplier’s location, transportation costs,
language, customer’s location, etc. It mentions that, “[t]he arena of competition
affected by the merger may be geographically bounded if geography limits some
customers’ willingness or ability to substitute to some products, or some suppliers’
willingness or ability to serve some customers. Both supplier and customer locations
can affect this. The Agencies apply the principles of market definition described here

27
Id. at 8
28
Id. at 9
29
J. Gregory Sidak & David J. Teece; “Dynamic Competition in Antitrust Law” ; 20 November 2009;
retrieved from https://www.criterioneconomics.com/docs/dynamic-comp1.pdf; last accessed on 27-01-
2017
30
Section 4.1 of Horizontal Merger Guidelines ; U.S. Department of Justice and the Federal Trade
Commission;
Issued: August 19, 2010; pg no 8; Retrieved from
https://www.ftc.gov/sites/default/files/attachments/merger-review/100819hmg.pdf; Last accessed on
28-01-2017

24
and in Section 4.1 to define a relevant market with a geographic dimension as well as
a product dimension.”31

Different US courts have tried to define relevant market through various decisions.
Some of them are mentioned below.

America Online, Inc. v. GreatDeals.Net,32 explained relevant market as having two

dimensions. According to this decision, “(1) the relevant product market, which
identifies the products or services that compete with each other, and (2) the relevant
geographic market, which identifies the geographic area within which competition
takes place."33

The commission also commented that "[t]he outer boundaries of a relevant market are
determined by reasonable interchangeability of use. Reasonable interchangeability of
use refers to consumers' practicable ability to switch from one product or service to
another.”34

In United States v. Microsoft Corp., the court talked about the test for reasonable
interchangeability and highlighted that, “[t]he test of reasonable interchangeability . . .
[requires] the District Court to consider only substitutes that constrain pricing in the
reasonably foreseeable future, and only products that can enter the market in a
relatively short time can perform this function." 35

2.2 THE FRAMEWORK TO DETERMINE RELEVANT MARKET

The determination of a relevant market has importance in determining the question of

dominance, anti-competitive agreements and evaluating combinations. Any
agreement under section 3 of the competition act, 2002 needs to be looked at as being
anti-competitive in nature only with reference to a relevant market.36 Similarly, the

31
Id. at Section 4.2
32
Supra note 7
33
Id. at 857-58
34
Id. at 858
35
253 F.3d 34, at 53-54
36
M. Govindarajan; Relevant Market under Competition Act 2002, May 14, 2015; retrieved from
https://www.taxmanagementindia.com/visitor/detail_article.asp?ArticleID=6256; last accessed on 17-
02-2017

25
question of an enterprise abusing its dominance position could be checked in
reference to a relevant market only.37

The basic test for determining a relevant market is the legal test (Test of
Interchangeability), which means that where a product or service is considered to be
interchangeable or substitutable by the other product, both the products will fall in
same relevant product market.38 However, there may be difficulties in assessing or
measuring the substitutability of a product due to lack of relevant data or unreliable
data on the issue. Other than this, there are three tests that are used by the authorities
to assess the relevant market: demand-side substitutability, supply-side substitutability
and potential competition.

(i) Demand-side substitutability: This entails the collection of products that are
considered as substitutable by the consumer, based upon their prices, intended use,
characteristics, etc. Department of Justice and the Federal Trade Commission first
used a technique, known as SSNIP test (Small but Significant Non-transitory Increase
in Price) to determine the demand side substitutability i.e. to determine whether two
products will fall within the same relevant market.39 This test examines the response
of a consumer to a small but significant and non transitory increase in price of a
product. The primary question to be asked is whether a small but significant increase
made in price of product “A”, will make the customers of Product “A” shift their
purchases to Product “B”. If yes, then product “A” and product “B” form the part of
same relevant product market. In a similar manner, SSNIP test can be applied to
determine relevant geographic market as well. For example, if small but significant
increase in price of product “A” is made in Haryana, will the consumers shift to
sellers in Delhi? If yes, then Delhi and Haryana will form the same relevant
geographic market.

But how is this “small and significant increase” determined? The Commission Notice
on Market Definition mentions, “[t]he question to be answered is whether the parties'
customers would switch to readily available substitutes or to suppliers located

37
Supra note 15 at Sec. 4
38
Richard Whish & David Bailey, Competition Law at 30 (7th ed. 2012)
39
Louis Altman, Malla Pollack; Callmann on Unfair Competition, Trademarks and Monopolies at 29
(4th ed., 2016)

26
elsewhere in response to a hypothetical small (in the range 5 % to 10 %) but
permanent relative price increase in the products and areas being considered.”40

But what if the answer to the above questions is ‘No.’ What if a firm raises the price
of its product by small but significant amount and the customers does not shift to
products offered by some other firm? If inspite of making an increase in prices, firm is
able to retain its customers as well as generate profits, the firm is facing no potential
competitive restraints. In such a scenario, such a market would be “worth
monopolising.”41 So for this reason, the SSNIP test is also known as “Hypothetical
Monopolist Test.”

In such a scenario, it means that there are no restraints, as inspite of increase in prices,
firm is retaining its customers as well as earning profits.

(ii) Supply- Side Substitutability:

This deals with examining the market from the supply side i.e. degree of
substitutability from side of supplier/seller. For example, Mr. X is the producer of
laptops and Mr. Y produces tablets. Mr. X can easily, just by making some changes in
his production process, can produce tablets also i.e. the laptops and tablets are
substitutable from the supply side (although they may not be considered as
interchangeable by consumer i.e. not necessarily demand-side substitutable). So, the
authorities by applying supply side substitutability may hold that these two products
form a part of same relevant market.42

The commission notice talks about Supply side substitutability by referring to a

situation where it is easy for suppliers to switch to producing the relevant products
without having to incur any significant amount of additional cost. 43

(iii) Potential Competition:

The third test to assess the relevant market is potential competition, which is
mentioned under Para 24 of the Notice. But this test is to be relied upon in exceptional
situations and at a subsequent stage.44

40
Supra note 21 at Para 17
41
Supra note 36 at 31
42
Id. at 33
43
Supra note 36 at 20

27
The commission notice, in reference to potential competition, clearly states that this
source of constraint on competition is used for analysis only at a subsequent stage and
not in the beginning while defining markets.45 After the relevant market has been
defined and it gives rise to competition issues, the potential competition is taken into
account for further analysis.46

Para 24 of the Notice states that, “[t]he third source of competitive constraint,
potential competition, is not taken into account when defining markets, since the
conditions under which potential competition will actually represent an effective
competitive constraint depend on the analysis of specific factors and circumstances
related to the conditions of entry. If required, this analysis is only carried out at a
subsequent stage, in general once the position of the companies involved in the
relevant market has already been ascertained, and when such position gives rise to
concerns from a competition point of view.”So the application of this test requires
additional information and its interpretation.47

2.3 CONCEPT OF RELEVANT MARKET IN REFERENCE TO E-

COMMERCE:

The question of relevant market in e-commerce sector has been raised in various
jurisdictions all over the world and the authorities have tried to address the issue by
giving the opinion in various case laws. This section presents an overview of the case
laws in different jurisdictions:

2.3.1 EUROPEAN UNION:

One of the prominent cases in this regard is Otto/ Grattan case,48This case relates to
an acquisition of Grattan plc (a subsidiary of Next Plc) by Otto Versand GmbH . 49
Both the parties were involved in retail of non-food items through a catalogue mail

44
Supra note 4 at 20
45
Supra note 36 at 24
46
Ibid.
47
Id. at 21
48
Case No. IV/M.070
49
Id. at 1

28
order. The acquirer company, Otto, operated pan Europe through a number of locally
owned subsidiaries, especially active in Germany, France, UK, Spain and Italy,
whereas the target company Grattan primarily operated in UK.50

Both the companies were engaged in distribution of non–food products such as ladies
wear, men’s wear, sports equipment, furniture and textiles.51In this case, the
Commission observed that cross border trading is rendered economically impractical
due to certain factors such as difference in language, difference in custom procedures,
VAT, higher cost of placing international orders, delay in its distribution, etc.52
Therefore, the commission held the relevant geographic market as United Kingdom.53

The parties contended that the relevant product market in this case is the whole retail
market for non-food items. However, the commission observed that the sales through
catalogue orders possess certain specific characteristics that distinguish it from other
form of retail. It allows consumers to select product from a catalogue while sitting at
home, get them delivered at their doorsteps and if they don’t like the product, they can
return it and get reimbursed. This is specifically considered non substitutable by those
who face difficulty in going out to buy things(elderly and disabled) and by those in
who do not have access to such goods in their neighbourhood.54Therefore, the
Commission held the view that the relevant market in this case is restricted to the sale
of non-food items through catalogue mail orders in UK. 55

Another important case is Bertelsmann /Mondadori case56 that relates to joint

acquisition of a newly created company by Bertelsmann AG (‘Bertelsmann’) and
Arnoldo Mondadori Editore S.p.A. (‘Mondadori’).57The book club of Bertelsmann
(Euroclub) and that of Mondadori (Club degli Editori) was to be combined by the
joint venture and the newly created company was meant to be used to carry out Italian
book club activities of the parties’58

50
Id. at 7,8
51
Id. at 10
52
Id. at 11
53
Ibid.
54
Case Note: Otto/Grattan, Case No. IV/M070', EC Merger Control Reporter at 111
55
Supra note 48 at 12
56
Case No IV/M.1407
57
Id. at 1
58
Id. at 5

29
The commission noted that the activities of the parties overlapped only in Italy. Also,
the proposed joint venture was concerned only with the sale of books in Italian
language. The Commission defined the relevant geographic market on the basis of the
language of the books.59Therefore, the relevant geographic market was held to be
Italy.60

The parties contented that the retail of books, irrespective of the distribution channel
used, would comprise the relevant product market in this case as the consumer’s
behaviour indicate that buying books from bookstores, book clubs, supermarkets,
through mail order, etc are considered substitutable by the consumer.61 However, the
Commission made a differentiation between distant selling (includes book clubs, sales
through Internet, mail orders) and other forms of selling.62 The commission, in its
decision, relied on the Otto/Grattan case, where it had made a distinction between sale
63
through catalogue mail order and retail sale. The Commission quoted reasons for
distinguishing the relevant product market for books sold via internet and books sold
in retail shops. It was observed that books sold via internet provide an option to the
consumer to choose books from home, have them delivered at doorstep, can be easily
returned and reimbursed at the service cost of seller. It was also noted that buying
books through internet is preferred choice of those living in isolated areas that have no
other alternative available.64

Therefore the commission considered that the different forms of distant selling (book
clubs, sales through Internet, mail orders) were substitutable with one another, but
different from overall retail of books.65

Yet another interesting case is Bertelsmann/Havas / Bol.66In this case, Havas SA and
Bertelsmann AG filed for an operation under which they were acquiring Bol and Snc

59
Supra note 4 at 48;
60
Supra note 54at 18
61
Id. at 13
62
Id. at 15
63
Case No. IV/M.070
64
Supra note 54at 15
65
Ibid.
66
Case no. IV/M.1459

30
by purchasing their shares.67 The overlapping business of the entities was publishing
and selling of books over internet (distant sale of consumer books).68

Since the case dealt with the issue of books sold online, the main question was
whether these books constitute a separate relevant market or not. The Commission
regarded the online selling of books as mere another type of selling (Distance selling)
because of the fact that this case was put up before the commission when selling over
internet was not a mature market but was considered as an “Emerging Market”.69

But the case was closed in the same year as that of Bertelsmann/Mondadori case. 70 So
referring to the decision of Bertelsmann/Mondadori case, the Commission established
that the market for online selling of the consumer books should be regarded as
separate relevant market because it is characterised by some distinctive features such
as technology and access to internet.71

As far as relevant geographic market is concerned, the parties contented that there will
be two different geographic markets- (i) for publishing books- relevant geographic
market will be national, and (ii) for sale of books through internet – Relevant
geographic market will be worldwide.72 The Commission observed that the general
sale of books though internet holds a large majority in France (70-80% of total sale),
which indicates that the geographic market may be France.73 However, the sale
through internet makes the market go beyond the national market. The commission
said that as per the investigation, the proposed acquisition will not lead to creation of
a dominant position (combined market share of parties was 15-20%). So the question
of determining the exact relevant geographic market was left open.74

Finally one may also look at Darty /Fnac case. In this case, acquisition of Darty by
Fnacwas approved by the French Competition Authority (FCA). It was the first time
in France and even in Europe that the court held that the relevant market in context of

67
Id. at 1
68
Id. at 3
69
Id. at 17
70
Supra note 56 at 5
71
Ibid.
72
Supra note 66 at 13
73
Id. at 14
74
Ibid.

31
retail of electronic product includes both online and offline stores.75 In other words,
the retail of electronic products through online as well as offline channel was
considered as a part of the same relevant market.76

2.3.2. UNITED STATES:

Since e-commerce is an internet backed market, and internet in itself has no

geographical boundaries as such, so defining the e-commerce market in terms of the
relevant geographical market will be a tough task. So, the authorities’ demarcation of
the e-commerce market is majorly based upon the relevant product in question.

The importance of defining a correct relevant market can be derived from the fact that
the courts have dismissed quite a few cases on the failure of the party to draw a
relevant market, e.g. in America Online, Inc. v. GreatDeals.Net.77

In BookLocker.com, Inc. v. Amazon.com, Inc.78an action was brought against Amazon

by a PoD (print on demand) publishing company Booklocker, alleging that Amazon
was indulging in tying its services for online bookstore with the printing services of
its subsidiary.79 Booklocker alleged that authors of PoD books were refusing to work
with it unless it grants similar services as Amazon.80

75
Marta Giner, Acquisition of Darty by Fnac: the competition watchdog modernizes its view to define
a market by including in-store and online retail channels, January 2017, retrieved from
http://www.nortonrosefulbright.com/knowledge/publications/146230/acquisition-of-darty-by-fnac-the-
competition-watchdog-modernizes-its-view-to-define-a-market-by-including-in-, last accessed on 22-
05-2017
76
Transatlantic Antitrust and IPR Developments, Bimonthly Newsletter, Issue No. 3-4/2016 , Stanford
– Vienna Transatlantic Technology Law Forum, September 2016 at 11, retrieved from https://www-
cdn.law.stanford.edu/wp-content/uploads/2015/04/2016-3-4.pdf, last accessed on 23-05-2017
77
49 F. Supp. 2d 851; In a counterclaim defendant Greatdeals.net alleged that plaintiff America Online
had engaged in monopolizing activities by blocking Greatdeals.net's unsolicited bulk e-mails to the
plaintiff's subscribers. Greatdeals.net alleged that the relevant market was restricted to AOL e-mail
advertising. However, the court rejected this construction of the product market as it found there to be
numerous substitutes for e-mail advertising, such as other forms of Internet advertising, and that the
AOL subscribers did not form their own market as other companies offered the same service as AOL,
such Hotmail and Yahoo.
78
650 F.Supp.2d 89 (2009), United States District Court, D. Maine
79
Id. at 2
80
Herbert Hovenkamp, Michael A. Carrier, IP and Antitrust: An Analysis of Antitrust Principles
Applied to Intellectual Property Law 86, (3rd ed. 2016)

32
The plaintiff contended that the relevant market is the retail of books in online
market.81 It was also asserted that Amazon’s bookstore is the dominant channel for
selling PoD books in this market, with market share of above 70%.82

The court accepted the contention of plaintiff that the relevant market was the market
for books ordered by customers online, i.e. market for online book selling and the
market share of Amazon in PoD books sufficient to act as a support for the allegation
of tying.83

In another case Gerlinger v. Amazon.com,Inc.84 the plaintiff was a customer, Gary

Gerlinger who had purchased books online.85 He challenged an agreement between a
brick and mortar bookseller- Borders Group Inc, and Online seller Amazon, alleging
it to be violating antitrust law and trying to eliminate competition because of which he
is denied choice and is forced to pay a supra-competitive price for the books he is
willing to purchase.86 The plaintiff argued that the online sale of books is the relevant
market.87 Amazon denied the existence of such a relevant market by referring to a
survey by Lewis Mobilio which showed that customers who purchase any particular
book from online channel are as likely to purchase it from offline stores as well.88
Therefore the commission held that the books that were being sold online won’t form
a separate relevant market as they were easily available in the brick and mortar shops
and are also considered substitutable by the customer. 89

Another important case from the US is Re eBay Seller Antitrust Litigation.90This case
was filed by three sellers who were selling their goods through online marketplace
eBay. 91In this case, around seven allegations were made against eBay for abusing its
monopoly position, unreasonable tying, conspiracy in restraint of trade and commerce
and indulging in other unfair business practices in online auctions. 92

81
Id. at 52
82
Id. at 23-24
83
Id. at 35
84
311 F.Supp.2d 838 (N.D.Cal.2004)
85
Id. at 2
86
Id. at 4
87
Id. at 49
88
Id. at 15
89
Id. at 15
90
545 F. Supp.2d 1027 (N.D. Cal. 2008)
91
Id. at 1030
92
Ibid.

33
The plaintiff alleged the relevant market as the market for online auctions.93 But the
problem is that it failed to, “acknowledge that alternatives to eBay exist, let alone
distinguish it from the pool of obvious substitutes.”94 eBay argued that online means
is not the only way to auction and there are various other options available such as car
dealerships, classified ads, notice on bulletin boards, car dealerships, garage sale and
so on. There are various ways through which people used to sell their personal items,
before advent of eBay, many of which still exist.95

On the above arguments provided by eBay, the court agreed that the relevant market
defined by plaintiff is “[n]arrowly defined and may be implausible as a theoretical
matter.”96 However the court did not dismiss the claim on the basis that at such
nascent phase of litigation, the allegations and arguments made by the plaintiff are
sufficient to allow the petition, but the plaintiff will be required to prove the alleged
market.97

Subsequently, eBay brought about a motion for summary judgement, in which the
court upheld that the question of whether the online auction is a relevant market in
itself is a triable issue.98 Here, the plaintiffs failed to prove that the acts of eBay were
causing any harm to competition or to the plaintiff and hence the decision was granted
in favour of eBay.99 The question that “whether the online auction market is a viable
relevant market definition for antitrust purposes” was left open.

American Online, Inc. v. GreatDeals.Netis yet another interesting case in this

context.100In this case, Greatdeals.net filed a complaint again American Online
(AOL), alleging that plaintiff is indulging in anti-competitive activities by blocking its
bulk mails to American Online’s subscribers.101For this purpose, the defendant
alleged that American Online e-mail advertising is the relevant market.102

93
Id. at 1032
94
Ibid.
95
Ibid.
96
Id. at 1033
97
Jared Kagan, Bricks, Mortar, and Google: Defining the Relevant Antitrust Market for Internet-Based
Companies, 55 New York Law School Law Review 2011, at 290
98
Ibid.
99
Re eBay, 2010 WL 760433, at 9 (N.D. Cal. Mar. 4, 2010)
100
49 F.Supp.2d 851
101
Id. at 854
102
Id. at 857

34
However, the court rejected this construction of the product market as it found there
to be numerous substitutes for e-mail advertising, such as other forms of internet
advertising, and that the AOL subscribers did not form their own market as other
companies like Hotmail and Yahoo also offered the same services.103

The court rejected the plaintiff’s contention that only specific e-mail advertising will
constitute relevant market and held that since there are various substitutes available
for advertising like newspaper, radio, mail, television, distributing leaflets, etc., some
of which are even cheaper than email advertising.104 The court also added that
substitutes are also available for AOL and subscribers are free to choose from other
companies providing similar services like yahoo, prodigy or hotmail.105

In relation to relevant geographic market, the court held that relevant geographic
market can be defined ideally in terms of a place having some boundaries in which
competition takes place. Based on this, they refused to consider internet as relevant
geographic market as internet can’t be defined in boundaries as it is “[n]ot a place or
location, its infinite.”106

From the above cases it can be contemplated that the decisions of USA competition
law agencies regarding relevant market heavily depend on the fact that for almost
every product that is being sold online, a substitute is available in the offline retail
sector as well. Due to this reason, they have been hesitant to accept online market as a
separate relevant market. Also, the US courts have quoted the American Online case’s
judgement in various other cases and maintained that relevant geographic market has
to be demarcated as a place with physical boundaries.

2.3.3 INDIA:

The traditional stores are facing a lot of pressure due to the online retailers and e-
commerce websites because a significant proportion of their consumer base has
shifted to online shopping. Many competition law related concerns have been raised
by the brick and mortar retailers in India with reference to the conduct of online
retailers. In order to enquire into such allegations, it becomes vital to figure out the

103
Id. at 858
104
Ibid.
105
Ibid.
106
Ibid.

35
relevant market in question and to determine whether the online (e-tailers) and offline
(brick and mortar) retailers form distinct relevant markets or the same relevant
market. As per the decisions given by CCI till now, the authorities do not recognise
online and offline retail as different markets, but as different platforms of same
market.107

One of the most important case in this regard is Ashish Ahuja v. Snapdeal.com.108In
this case, the complainant was a seller of SanDisk products, who used to sell the
products through online mode via Snapdeal. But his listed products were eventually
taken off the website and Snapdeal refused to allow him to make any sales through its
portal. He was later on conveyed that SanDisk has issued a list of its authorized
agents and only such authorized agents will be allowed to sell its products through
Snapdeal, and if the complainant wanted to continue selling SanDisk products, he
needs to obtain a “No objection Certificate” from SanDisk.

The commission in this case demarcated the relevant product market based on the
price and intended use of the product. It was held by the Commission that the relevant
product market in this case will be the market for small sized and portable storage
devices, as SD cards, pen drives and Micro SD Cards are substitutable. 109It was noted
by the commission that a buyer compares the products available in both the online and
offline market before making a purchase, as both these markets vary in terms of
prices, discounts and the experience of a buyer. So a buyer tends to shift to the other
market (say online market) if there is an increase in the prices of the products
available at one (offline market), and vice-versa. CCI observed that, “[b]oth offline
and online markets differ in terms of discounts and shopping experience and buyers
weigh the options available in both markets and decides accordingly. If the price in
the online market increase significantly, then the consumer is likely to shift towards
the offline market and vice versa.”110

107
Sudipto Dey, When a huge discount is not anti-competitive, October 12,2016, retrieved from
http://www.business-standard.com/article/opinion/when-a-huge-discount-is-not-anti-competitive-
114101200700_1.html; Last accessed on 17-02-2017
108
Supra note 13
109
Id. at 15
110
Ibid.

36
Due to this reasoning the Commission held that, “[t]hese two markets are different
channels of distribution of the same product and are not two different relevant
markets.”111

In this case, the relevant geographic market was held on the basis of the country, i.e.
India. The relevant geographic market would be India.112

So in relation to e-commerce, CCI has made this important observation that the online
market is not a separate relevant market, but a ‘different channel of distribution’ as
the buyers can consumer can purchase the products from both online as well as offline
market depending on their preferences, prices offered and convenience.This
observation has had a major impact on the regulation of e-commerce industry and
deciding upon various allegations of abuse of dominance and other anti-competitive
activities. The share of e-commerce in the relevant market of retail is less than 1%,
which substantially very small proportion of the whole retail sector.113

So if we go by this approach, the dominant players in the e-commerce sector, such as

Amazon and Flipkart cannot be termed as dominant in the relevant market of retail,
which subsequently negates the existence of anti-competitive practices such as abuse
of dominance. One of the most recent examples is that of Reliance Jio, against which
the allegations of predatory pricing could not stand because it is not a dominant
player.114

Another interesting case in this context is Mohit Manglani v. Flipkart and others.115In
this case, the informed had filed complaint against 5 major e-commerce players-
Flipkart, Amazon, Jasper Infotech, Vector E-commerce and Xerion Retail, alleging
anti-competitive conduct, like exclusive supply and distribution agreements. It was
alleged that these online portals were entering into exclusive agreements with regard
to sale of certain products sold exclusively on their website. Such agreements
provided for exclusion of the sale of such products on any other e-commerce website
111
Supra note 13 at 16
112
Id. at 17
113
Deepak Verma v. Clues Network Pvt. Ltd and ors., Case 34 of 2016 at para 11
114
Upasana Jain; “Reliance Jio: TRAI official says predatory pricing doesn’t apply”; Livemint, 22
September 2016; retrieved from
http://www.livemint.com/Companies/uhVdHDDwGV5v7XiDE7GlPL/Reliance-Jio-Trai official-says-
predatory-pricing-doesnt-a.html; Last accessed on 4-02-2017
115
Supra note 14

37
as well as any brick and mortar shop. This allowed the particular website to control
the supply, impose conditions, affect the price and ultimately cause an appreciable
adverse effect (AAEC) on competition. The complainant referred to an exclusive sale
agreement between Flipkart and Rupa Publications regarding the sale of Chetan
Bhagat’s Novel “Half Girlfriend.” It was also alleged that due to such agreements,
these websites had acquired a “product specific monopoly” i.e. 100% dominance in
the relevant market of that product.

In this case, the informant argued that the relevant market in this case would be the
novel “Half girlfriend” i.e. the specific product in question which was put on sale
exclusively on the online marketplace. The CCI did not agree with the contention of
the informant and said that the relevant market could not be product specific i.e. every
product can’t be said to be a relevant market in itself, as it will also include its
substitutes.116It also commented that, “[i]rrespective 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.”117

Finally it is also interesting to look at Deepak Verma v. Clues Network Pvt. Ltd.118In
this case, the complaint was filed against some e-commerce companies(
eBay,Amazon, Yepme, Snapdeal, etc. ) and certain sellers on such websites
(Cloudtail, Shree Govind Store, B.R.Mart, etc) alleging deficiency in products and
services provided by them. Use of unfair and restrictive trade practices to increase
their business, was also alleged in the complaint.119

In this case, the Commission referred to e-commerce as, “a wide range of online
business activities for sale and purchase of products and services”120Further, the
Commission observed that there is a substitutability pattern followed by buyers. If the
prices online are low, or if the discounts offered are high, the customers prefer buying
from online market. But if the online prices are increased or the choices offered are
decreased, the customer shifts to offline market. Therefore the Commission held the

116
Anubhuti Mishra; CCI's Take on The Indian E-Commerce Market: Protect Competition, Not
Competitors; PSA Newsletter; May 2015; pg.no.3; retrieved from
http://www.psalegal.com/upload/publication/assocFile/ENewslineMay2015.pdf ; Last accessed on 06-
02-2017
117
Supra note 14 at 18
118
Case No. 34 of 2016
119
Id. at 3-5
120
Id. at 6

38
view that, “These two markets are only two different channels of distribution and are
not two different relevant markets.”121

2.4 EVOLVING A MORE COMPREHENSIVE APPROACH

As discussed earlier, to ensure a proper analysis of any anti-competitive activity,

defining a relevant market correctly is very important. There are a number of
substitutes that are available for a product, not only online but offline as well. So in
order to demarcate a relevant market, it should be kept in mind that a very narrow
definition should not be taken, as it will not cover all the substitutes that court should
consider. But then a very wide definition may also go wrong at some places, as it
tends to include the products which may not be considered substitutable by
consumers. Another issue comes up with regard to complaints about abuse of
dominance. If a player is dominant in e-commerce, it does not necessarily mean that
he is dominant in the whole retail sector for that product. The dominance will be
correctly assessed only when the relevant market for that player is set out.For the
purpose of this analysis, the courts may see if the substitutes of a product are available
in offline market or is available only through online mode. The first category will
comprise a wider market, and the second one will demarcate a narrower relevant
market.

As discussed above in the Sandisk case, CCI maintained that online portals and
offline retail are two different channels of sales and not two different relevant
markets. In other words, CCI has considered that both online and offline retail forms a
part of same relevant market. Despite the growth of e-commerce in past few years, the
market share of e-commerce sector, as a part of India’s total retail sector, is less than
1%.122 With such a substantially low market share, it is nearly impossible for abusive
practice by any online retailer to even be investigated under section 4 of the
competition act.

In Deepak Verma v. Clues Network Pvt. Ltd. and ors also CCI maintained that “online
and offline market are two different channels of distribution and not two different
relevant markets”123In this case CCI also noted that offline channel holds more than

121
Id. at para 10
122
Supra note 113 at 11
123
Id. at para 11

39
99% share in retail market. Buyers are not dependent on online sellers and are free to
buy offline.124 Similar observation regarding abuse was given by CCI in Mohit
Manglani case.125

A critical analysis of these orders suggests that CCI might have gone a bit too far in
protecting the development of e-commerce by giving such retailers a kind of blanket
protection from section 4. Although CCI has clearly stated in the SanDisk as well as
in Deepak Verma order that online and offline markets are “different channels of
distribution of same relevant market”, in Mohit Manglani case it mentioned that,
“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".126

Instead of clearly marking the relevant market and then accessing the dominance in
this case, CCI has tried to take the mid path. This again gives rise to a lot of ambiguity
regarding the stand taken by CCI in this regard.

Another issue that pops up is that whether a single brand’s product on the online
channel comprises a relevant market in itself.127The CCI has negated this and
maintained that a specific product cannot be said to constitute a relevant market in
itself.128 In Sonam Sharma v. Apple Inc. and ors, the commission said that it, “finds it
difficult to define the relevant market as just consisting of iPhones. Such single-brand
markets are rarely tenable.129 Relevant markets generally cannot be limited to a single
manufacturer’s products. The Commission views reasonable interchangability
between iPhones and other smartphones.”130

This observation of commission is in consistence with the fact that the main purpose
of relevant market is to determine the products that may act as competitive restraint

124
Id. at para 15
125
Mohit Manglani v. Flipkart India Private Limitedand ors., Case No. 80 of 2014 at Para 18
126
Divye Sharma; India: Competition Law And E-Commerce: A Concern For The Future; 27 May
2015; retrieved from
http://www.mondaq.com/india/x/400368/Antitrust+Competition/Competition+Law+And+E-
commerce+A+Concern+For+The+Future; last accessed on 7-02-2017
127
Supra note 125 at 5 (It was argued that the product in question, i.e. the novel “Half Girlfriend”
would constitute a relevant market in itself.)
128
Id. at para 18
129
Case No. 24/2011
130
Sonam Sharma v. Apple Inc. and ors, para 46

40
on the manufacturer and hence it may not be correct to consider only a specific
product available at an online platform as a relevant market in itself.131

However, the decisions of CCI suggest that CCI has still not taken a firm stand on the
issue of relevant market in e-commerce sector. Also, none of these cases that have
come before CCI have gone past the preliminary enquiry stage.132 Although CCI has
dealt with various issues and allegations such as predatory pricing, exclusive
agreements etc, a truly landmark order addressing the competition law issues in e-
commerce sector is still awaited.133 For bringing more certainty and clarity with
regard to competition issues in e-commerce, it becomes really important for CCI to
provide more concrete rationales in determining relevant market.134

131
Abir Roy, Competition Law in India: A Practical Guide, 2016, at 39
132
Supra note 2 at 3
133
Ibid.
134
Prashant Prakhar, Niyati Gandhi “Competition Law in India- Report on Jurisprudential Trends”;
June 2015; Retrieved from
http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/Competition_Law_in_In
dia.pdf ; Last accessed on 17-02-2017

41
 CHAPTER 3: POTENTIAL COMPETITION ISSUES IN E-
COMMERCE SECTOR

The development of e-commerce has not happened without posing challenges. As

discussed earlier, many competition law related concerns have been raised by the brick
and mortar retailers with reference to the conduct of online retailers. This chapter
analyses some of the important competition related issues that have emerged in the e-
commerce sector and how they have been dealt with by the competition authorities in
different jurisdictions. As e-commerce is still at a nascent stage in India, more issues
might emerge in the coming years and so this section also tries to identify such potential
issues that might face the scrutiny of the authorities in coming years.

3.1 EXCHANGE OF INFORMATION

Whether undertakings infringe antitrust law when they indulge in exchange of

information amongst each other is an important competition law issue. In 2010, the
European Commission adopted the “Guidelines on Horizontal cooperation Agreements”
that provide guidance on the way Article 101 should be applied to information
exchange.226 These guidelines are not legally binding but a guidance that contains types
of information exchange, their assessment under article 101 and the exchanges of
information that have, as their object, the restriction of competition and those that have
restriction of competition as their effect.227

The electronic marketplace models give ample opportunities for selling and purchasing of
goods and services. Since the goods are sold virtually and buyer cannot check it
physically, he has to rely on the information displayed or provided by the seller. In order
to increase the credibility of the product or the service, sellers tend to display a
considerable amount of information on the website. So, the exchange of information
takes place between seller and the buyer.

226
Richard Whish & David Bailey, Competition Law at 539 (7th ed. 2012)
227
Id. at 540

42
The access to internet globally and universally makes it easier for anyone anywhere in the
world to easily go through such information and hence this information is available to
everyone using such e-commerce marketplaces. This means, that the same information
i.e. information about the price, products, etc of one firm is also accessible to its
competitors. In other words, in such a set up, the exchange of information takes place not
just between sellers and buyer but also between the competitors. So the exchange of
information in the electronic marketplace takes place on both selling as well as
purchasing side of the market.

In the initial findings of e-commerce sector enquiry by commission, it was stated that the
transparency in the prices available online has a strong effect on behaviour of
competitors. It was found that 53 % of retailers continuously track the prices offered
online by their competitors and some of them even use automatic programmes for this
228
(67%). Out of the retailers using such automatic programmes, 78 % subsequently
change their prices based on the change in price of their competitors.229

Till now, neither the Commission has given any formal decision in context of exchange
of information on electronic marketplaces, nor have the electronic marketplaces been
discussed under the Guidelines. However, it is not wrong to suppose that whenever such
an analysis will be made, it will be made as per the principles provided under the
guidelines only.230

In Indian context also, CCI has not addressed this issue, but this could be one of the
major competition concerns that may arise in future and might also give rise to other anti-
competitive practices such as collusion.

228
European Commission, Preliminary Report on the E-commerce Sector Inquiry, September 2016 at 125
229
Ibid.
230
Supra note 1 at547

43
3.2 FREE RIDING

The OECD Glossary of Industrial Organisation Economics and Competition Law of

statistical terms define free riding as follows:

“Free riding occurs when one firm (or individual) benefits from the actions and efforts of
another without paying or sharing the costs.”231

This is related to pre-sale services, promotional activities, or informational services

carried out by sellers. In order to attract more customers, certain distributors provide
them with pre-sale services, which are carried out at the stores or physical outlets, such as
providing information, demonstrations, assistance about how to use a product, providing
technological know-how, details about its features, etc.232A customer may utilise the pre-
sale services of one seller, and then choose to purchase the product from another seller,
who is able to offer it at a lower price because he has not invested on any of these pre-
sale services. This “another seller” practising this opportunistic behaviour is known as a
“Free Rider”, i.e. the one who rides on the investment and costs of the other.233

An ambiguous impact of the emergence of e-marketplaces can be seen on this risk of

free- riding. The numerous discounts and lower prices offered by the sellers on these
online websites increases the chances of free riding on the investments made by offline
sellers on pre-sale services.234 This free riding leads to another issue. Because of the free
riding, many offline retailers have started favouring Minimum pricing agreements, where
the manufacturer sets a minimum price that is to be followed by the retailers. 235 Some of
these lesser known agreements also include obligation on retailers to refrain from giving
discounts, and if such obligations are not followed by the retailer (online and offline), the

231
Glossary of Industrial Organisation Economics and Competition Law at 46,
http://www.oecd.org/regreform/sectors/2376087.pdf; Last accessed on 23-04-2017
232
Marina Lao, INTERNET RETAILING AND “FREE-RIDING:” A POST-LEEGIN ANTITRUST
ANALYSIS, 14 No. 9 Journal of Internet Law 2(2011)
233
Ibid.
234
Supra note 4
235
Joseph Pereira, Price-Fixing Makes Comeback After Supreme Court Ruling, WALL ST. J. (Aug. 2008),
retrieved from https://www.wsj.com/articles/SB121901920116148325, last accessed on 29-05-2017

44
manufacturers may cut the supplies or may stop subsidising advertisements.236 The
argument given in favour of this is that they provide a “level playing field” for all the
retailers. The offline sellers believe that such agreements help to put a full stop on the
unfair competition between them and the online sellers, as the online sellers are able to
offer goods at lower prices because of their “low overhead costs.”237

But there are two sides to this. It can be argued that the electronic marketplaces not only
increases the free-riding opportunities for some products, but in some cases may reduce
this risk as well.238 Certain pre-sale services, like information services, may be provided
online and the supplier may easily access it through distributor’s website.

It can be stated that these allegations against online retailers are exaggerated. 239 There are
chances that this assumption about free riding done by online stores on the brick and
mortar stores is totally contradictory to the real scenario as the opposite of this may also
happen in many cases. The uncertainty about the quality of the product is a major concern
for many customers.240 A customer may use information provided by retailers on their
websites, browse through the options available, compare products and then eventually
buy from offline market.241 For example, in a survey conducted by IBM on US and UK
consumers, it was found that nearly 75 % consumers follow “Online to store” method for
shopping, i.e. during a shopping episode; they prefer surfing on internet about
merchandise and then buying it at a store.242 In such cases, it can be said that there are
chances that free riding takes place in the opposite direction as well and that the
assertions against online retailers are overstated.

236
Joseph Pereira, Why Some Toys Don't Get Discounted: Manufacturers Set Price Minimums That
Retailers Must Follow or Risk Getting Cut Off, WALL ST. J., ( Dec. 2008), retrieved from
https://www.wsj.com/articles/SB123007559680631543, last accessed on 28-05-2017
237
Supra note 1 at 546
238
Marina Lao ,Resale Price Maintenance: The Internet Phenomenon and Free Rider Issues, 55 The
Antitrust Bulletin 473,512 ( 2010)
239
Gregory T. Gundlach et al., Free Riding and Resale Price Maintenance : Insights from Marketing
Research and Practice, 55 Antitrust Bulletin, 381, 416 (2010)
240
Jiwoong Shin, How Does Free Riding on Customer Service Affect Competition?, 26 Marketing Science,
488, 499(2007)
241
Supra note 14 at 394
242
IBM, Understanding Consumer Patterns and Preferences in Multi-Channel Retailing, IBM Global
Business
Services White Paper (2008), retrieved from https://www-935.ibm.com/services/us/gbs/bus/pdf/gbe03092-
01-usen-multichannel.pdf, last accessed on 24-04-2017

45
Therefore, the free riding of online stores on the investment of their offline counterparts
can be said to be limited to products whose sale is depending on sensory experience. On
the other hand, offline stores free ride on online sellers where customer is sceptical about
the product and prefers to physically inspect it before buying.

Existence of “Free-riding” in e-commerce sector has been fully acknowledged by

manufacturers and retailers in the e-commerce sector inquiry conducted by European
Union. The growth of e-commerce has made it possible to customers to switch swiftly
between offline and online channel. Customers may utilise the pre-sale services offered
by one channel and then subsequently purchase from another channel. 243 The preliminary
report on sector enquiry indicated that 45% of the manufacturers responded that free
riding on brick and mortar shops, e.g. getting advice from qualified staff in brick and
mortar shops and then purchasing online, is very common244 and 42% responded that free
riding on online channel is more common, e.g. searching about products description,
comparing products online and then purchasing offline245 So the commission has
assessed that free riding is prevalent in both the ways. 246 In such cases, it becomes
difficult to protect the investment and to recoup the cost of pre-sale services or
investment made by the retailer.

In order to protect their investments against free riding, manufacturers may resort to
measures such as exclusive distribution agreements and selective distribution agreements,
which may further raise anti-competitive concerns.247

Trends across online sales show that customers prefer buying from sites or products
having higher customer reviews and better customer ratings. 248 Sometimes, a review may
also be provided by a customer who hasn’t bought the product from that site, for example
Flipkart, but instead from a brick and mortar store. 249 Although such customers can be
said to be free riding on Flipkart, but still in turn he creates a value and an image for
243
Supra note 3 at 283
244
Id. at 286
245
Id. at 287
246
Id. at 290
247
Id. at 75
248
Vasant Dhar, Does Chatter Matter? The Impact of User-Generated Content on Music Sales, 23 J.
Interactive Marketing300, 300 (2009)
249
Supra note 14 at 421

46
Flipkart. The marginal cost for a website, of each new free riding customer, is nearly
equal to zero. Also, a website or a product sold online is able to attract more customers
because of such reviews.250 For example, Judith in his article on Online Book Reviews
states that “[r]elative sale of a book on two different sites is related to the difference
across the two sites in terms of number of reviews and average star ranking.”251

The cost is fixed for a seller to upload content or design the website, there will be almost
zero marginal cost for each additional free riding customer. So the fact that inspite of free
riding, the online markets still continue to flourish and gain profits, could be explained by
the positive effects of free riding in the online retail.252 This outlook is capable of
changing the present views on the anti-competitive effects of the free riding on the
market.

As discussed above, the issue of free riding has been highlighted by the European
Commission’s sector enquiry as one of the reasons that further gives rise to various other
concerns.253 But it has not been addressed by the competition authorities in India till now
in any guidelines or in any of the decisions.

3.3 PREDATORY PRICING

Predatory pricing is one of the anti-competitive practices under the Indian Competition
Act. The act defines predatory pricing as, “the sale of goods or provision of services, at a
price which is below the cost, 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.”254

Abuse of dominance position is held anti-competitive under the act and predatory pricing

250
Julian Villanueva et al., The Impact of Marketing Induced Versus Word-of-Mouth Customer
Acquisition on Customer Equity Growth, 45 J. Marketing Res., 48, 48 (2008)
251
Judith A. Chevalier & Dina Mayzlin, The Effect of Word-of-Mouth on Sales: Online Book Reviews, 43
J. Marketing Res. 345, 354 (2005)
252
Supra note 14 at 422
253
Supra note 3 at 75
254
The Competition Act, 2002, Section 4, Explanation (b)

47
by a dominant undertaking may be held as abuse of its dominant position.255

The guidelines released by Department of Industrial Policy and Promotion ("DIPP"),

which have been earlier discussed in chapter 1, have increased the regulatory focus on e-
commerce.256 The guidelines clearly state that, “E-commerce entities providing
marketplace will not directly or indirectly influence the sale price of goods or services
and shall maintain level playing field.”257

The words “directly or indirectly” have been used to make sure that any of the indirect
and twisted paths chosen by the retailers to influence prices are discounts are also
covered. The control of marketplaces over the products, its price and discounts is banned.
Otherwise it would lead them to be categorised as inventory based model. But still the
marketplaces do have a significant say in the price at which these products are sold. Most
e-commerce sites witness heavy traffic during “Big Billion sales”, “End of season sales”,
etc. that offer heavy discounts on most of the products. Such sales are very undoubtedly
attractive and work to the benefit of consumers. But selling at such low prices by online
players can be deemed to be an anti-competitive practice and can attract scrutiny from
competition authorities.258 As per an investigation done by Hindustan times, which was
published in the Mint, e-tailers have been using different ways to indirectly influence the
prices.259 For example, Amazon uses “promotional funding” to sponsor the discounts
offered by its sellers. During diwali sales, an informal price is recommended to the sellers
for selling products during that time.260 If a seller decides to sell at the recommended
price, which results in a loss to him/her, he/she sends a “debit note” to Amazon,
255
Id. at Section 4(2)(a)(ii)
256
Department of Industrial Policy and Promotion, Guidelines for Foreign Direct Investment on e-
commerce, Press note 3 (2016) ; retrieved from
http://dipp.nic.in/English/acts_rules/Press_Notes/pn3_2016.pdf, last accessed on 11-04-2017
257
Id. at Para 2(ix)
258
Esha Shekhar, Are deep-discounts in e-commerce anti-competitive? Flipkart’s Big Billion Day Sale and
the way forward, October 17, 2014, retrieved from https://blog.ipleaders.in/are-deep-discounts-in-e-
commerce-anti-competitive-flipkarts-big-billion-day-sale-and-the-way-forward/, last accessed on 28-05-
2017
259
Shrutika Verma and Mihir Dalal, How Flipkart, Amazon and Snapdeal fund discounts, The Live Mint,
October 23, 2014, retrieved from http://www.livemint.com/Industry/boWA7iCWJ2sa6eDrNh4YdL/How-
Flipkart-Amazon-and-Snapdeal-fund-discounts.html , last accessed on 11-04-2017 (The information was
provided by six people with direct knowledge of the matter on the condition of anonymity because of the
sensitivity of the matter.)
260
Ibid.

48
regarding the cost they have suffered, which is then quietly refunded by Amazon to
him/her. Although such prices are not forced upon sellers to be accepted and followed,
but the sellers eventually sell at these recommended prices because of the potential
refund provided made by Amazon.261

Flipkart also uses a similar method of recommending informal prices. But instead of
refunding the sellers or using promotional funding, it relinquishes the listing fee or the
commission charged from the sellers for selling the products through the
marketplace.262Snapdeal also works in the same manner as Amazon, referred to as
“promotional expenses”, by paying sellers by RTGS or through cheques. In case of buy
one get one schemes launched by Snapdeal, Snapdeal let the commission fee forgo for
one product. 263

In Mohit Manglani v. Flipkart India Private Limited & ors, The All Delhi Computer
Trader Association (ADCTA) alleged that the through exclusive agreements with
retailers regarding a specific product, Flipkart and other online players were abusing their
dominant position and indulging in predatory pricing.264In this case, the Commission
observed that, “[i]rrespective 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.” 265
The Commission also took note of the fact
that the e-commerce market amounts for less than 1% of the total retail in the country. 266
Since none of the players were deemed dominant, the question of abuse by predatory
pricing did not arise and so the commission did not go into the issue of abuse in this case.

261
Kanuj Sharma, Insider story of online discounts from Flipkart Snapdeal and Amazon, October 25,2014,
retrieved from http://candytech.in/insider-story-of-online-discounts-from-flipkart-snapdeal-amazon/ , last
accessed on 15-05-2017
262
Supra note 24
263
Ibid
264
Case no 80 of 2014, para 12
265
Id. at 18
266
Id. at 10

49
It also needs to be noted that giving discounts to the consumers or selling at low prices is
not per se anti-competitive. In MCX Stock Exchange Ltd. v. National Stock Exchange of
India Ltd. & Ors,267 CCI defined predatory pricing as follows:

“Predatory pricing refers to conduct, where a dominant undertaking incurs losses or

foregoes profits in the short term with the aim of foreclosing its competitors. Broadly
speaking, it consists in one competitor setting a price which is "too low", such that
competitors find themselves unable to compete at that price.”268

It also commented that predatory pricing is deemed anti-competitive only when, “it is the
specific conduct of below the cost pricing with a view to reduce competition or eliminate
competitors.”269 The issue of huge discounts provided by e-tailers (Big billion sale of
Flipkart) have been questioned time and again by offline retailers. It was bought up in
Ashish Ahuja case and the Commission stated that the online and offline markets differ
from each other in terms of shopping experience and discounts.270 It also held that,
“[e]commerce market thrives on special discounts and deals.”271

Recently a complaint has been made to CCI via a letter dated March 2, 2017, by the All
India Online Vendors’ Association (a group of around 2000 online retailers) against
major marketplaces- Amazon and Flipkart.272 The retailers have alleged that Amazon
(through Cloudtail) and Flipkart (through WS Retail) are indulging in predatory pricing
and heavy discounts and are selling branded and private label products at “rock bottom
prices” which is wiping out the sales of other online sellers on the platform as well as the
business of its rival marketplaces273 The matter is yet to be settled and might CCI may
provide some guidelines regarding predatory pricing issue in online retail.

267
Case No. 13/2009
268
Id. at 8.4.2
269
Id. at 21.3
270
Ashish Ahuja v. Snapdeal, Case no 17 of 2014, Para 16
271
Id. at Para 21
272
Shambhavi Anand, Online sellers write to CCI alleging predatory pricing by Flipkart’s WS Retail and
Amazon’s Cloudtail, Economic Times, March 04, 2017, retrieved from
http://economictimes.indiatimes.com/small-biz/startups/online-sellers-write-to-cci-alleging-predatory-
pricing-by-flipkarts-ws-retail-and-amazons-cloudtail/articleshow/57456435.cms, last accessed on 22-05-
2017
273
Ibid.

50
But it also needs to be noted that there are certain reasons why such deep discounts and
low prices offered by e-tailers may not be considered as predatory pricing under certain
contexts. Firstly, the e-commerce marketplaces are not retailers but mere platforms. In
Ashish Ahuja case, CCI took into consideration the fact that Snapdeal is a mere
intermediary and not engaged in selling/purchasing products itself and hence it cannot be
declared as dominant player in the relevant market for portable storage devices(pen
drives, SD Memory Cards and Micro SD Cards).274 Although this argument is restricted
to marketplaces, it clarified clear that no case of predatory pricing can be sustained
against the e-commerce giants until the products are offered by different distributors on
their platform.275

Secondly, CCI has made it clear that predatory pricing can be proved only when it is
proved that the intention of online retail platform was to reduce competition or market
foreclosure and entry barriers for new entrants.276 But owing to the growth in number of
online retail players, foreclosure or entry barriers seem to be very less likely.277

Thirdly, proving allegation of predatory pricing requires establishing a dominant position,

which is difficult in e-commerce market. The Commission has recognised this fact in
Ashish Ahuja case, CCI had commented that there are various competitors in the Indian
e-commerce market like eBay, FlipKart, Shopclues, Junglee, Amazon, Yebhi,rediff.com,
etc who are catering to the need to customers as well as to the sellers(by providing them a
platform to sell). So it is difficult to consider any one e-commerce player as dominant.278

The above analysis comes into picture when we take e-commerce as a separate relevant
market. But even if we take it as a part of existing retail distribution, allegation of
predatory pricing may not succeed. The share of e-commerce in the total retail sector in

274
Supra note 45 at 21
275
Id. at 25
276
Supra note 42 at Para 21.3
277
Madhav Chanchani, Mugdha Variyar, Amazon India triples its seller base ahead of festive season sales,
Economic Times, September 15, 2016, retrieved from
http://tech.economictimes.indiatimes.com/news/internet/amazon-india-triples-the-no-of-sellers-on-its-
platform-ahead-of-festive-season/54340296; Also see Ravi Capoor, Moving from offline to online retail,
Jul 07, 2015, retrieved from https://www.ibef.org/blogs/moving-from-offline-to-online-retail, last accessed
on 28-05-2017
278
Supra note 45 at 21

51
India is significantly small - less than 1%.279 For any allegation of predatory pricing, the
dominant position of the player needs to be proved. This means that if a case of predatory
pricing has to succeed against an e-tailer, he should hold a dominant position in the total
retail market.280 Taking into consideration the small percentage that e-commerce sector
currently holds in the retail market, it is nearly impossible for any e-commerce player to
have a dominant position. Therefore a complaint made against any online player under
section 4 of the Indian competition act is not likely to succeed under the present
circumstances.

3.4 RESALE PRICE MAINTENANCE (RPM)

The Competition Act, 2002 defines RPM as, “any agreement to sell goods on condition
that the prices to be charged on the resale by the purchaser shall be the prices stipulated
by the seller unless it is clearly stated that prices lower than those prices may be
charged.”281 Any vertical agreement in context of resale price maintenance amongst
undertakings is an anti-competitive practice under Indian Competition law regime, if it
causes AAEC.282 To determine if any agreement has appreciable adverse effect, the
commission needs to take into consideration the factors mentioned under Section
19(3).283 The essential points that need to be taken into consideration in this regard are:

(i) An agreement between enterprises.

(ii) Enterprises are at different levels i.e. Vertical relation between parties.

(iii)Appreciable adverse effect under section 19(3)

279
Supra note 54 at 10
280
Geetanjali Sharma, Competition Law & E-Commerce: Emerging Trends, 1 ICLR 12 (2013)
281
Supra note 29 at Explanation (e) to Sec 3(4)
282
Supra note 29 at Sec 3(4)(e)
283
(i) creation of barriers to new entrants in the market;
(ii) driving existing competitors out of the market;
(iii) foreclosure of competition by hindering entry into the market;
(iv) accrual of benefits to consumers;
(v) improvements in production or distribution of goods or provision of services;
(vi) promotion of technical, scientific and economic development by means of production or distribution
of goods or provision of services.

52
In Jasper Infotech Pvt. Ltd. v. M/S Kaff Appliances Pvt. Ltd., Kaff put up a caution notice
on its website that its products sold by Snapdeal were counterfeit and the company would
not honour the warranty of any of its products that were purchased by a customer from
Snapdeal.284 It also served a legal notice on Snapdeal. 285

Subsequently, Jasper Infotech (operator and owner of Snapdeal) filed a case against Kaff
alleging resale price maintenance by Kaff. In the proceedings, the legal notice served on
Snapdeal was produced before commission and it is as follows:

“The goods manufactured by our client (Kaff) are sold at their exclusive chain of
authorized retail outlets and at the listed prices only and any discounted schemes
introduced and launched in the market is with the prior approval of our client.”286

Jasper also produced a mail that was sent to it by an official of Kaff and it stated, “It has
been observed that the KAFF prices on your website are below MOP list. This is to
remind you that if the MOP is not maintained properly company will not allow you to sell
our products either by authorised or unauthorised dealers or distributors. Kindly update
your pricing within 24 hrs.”287

Kaff was forcing Snapdeal to maintain Market operating prices (MOP) as it wants to
continue selling Kaff appliances through its marketplace and had also stated in the legal
notice that its products are sold by its agents only at listed prices. The commission
observed that Kaff has itself admitted these practices in the notice and in the mail, and
formed a prima facie opinion that this conduct of Kaff amounted to resale price
maintenance.288 The requirement laid down by Kaff to comply with MOP or resale price
maintenance was in contravention of section 3(4)(e) of the act.289 Regarding the
appreciable adverse effect on the market, commission said that with 28% market share,
any such agreement of Kaff with dealers is likely to have AAEC on the

284
Case no. 61 of 2014 at 3
285
Id. at 4
286
Id. at 7
287
Id at 14
288
Supra note 69 at 17
289
Ibid.

53
competition.290So, based on the above, a prima case face was made against Kaff and
under section 26(1), DG was directed to carry on investigation.291Although till now, this
is the only case that has been dealt by CCI regarding resale price maintenance in online
retail, but the approach of CCI has to be critically reviewed for certain reasons that are
mentioned further.

A RPM is not a hard core restriction as in some cases it can have pro-competitive effects
as well, such as it can reduce price competition amongst the retailers which leads to better
services, preventing free riding, economic efficiency, etc.292 Any analysis of an
allegation of resale price maintenance (sec 3), is to be done along with section 19(3). An
act of resale price maintenance will be held anti-competitive only when it have or is
likely to have AAEC. Whether it has an appreciable adverse effect or not is to be
determined by looking into the factors mentioned under section 19(3). 293 Although at
prima facie stage or at the stage of Section 26(1), detailed analysis is not required, some
bare minimum reasons are to be cited as the grounds for forming such opinion. Hon’ble
Supreme Court in Competition Commission of India v. Steel Authority of India Ltd. &
Anr(CCI v. SAIL)said,“[t]he Commission is expected to express prima facie view in
terms of Section 26(1) of the Act, without entering into any adjudicatory or determinative
process and by recording minimum reasons substantiating the formation of such opinion,
while all its other orders and decisions should be well reasoned.”294

In this case, CCI gave its opinion on AAEC as, “[o]n the issue of appreciable adverse
effect on competition (AAEC) in the market of supply and distribution of kitchen

290
Id. at 16
291
Id. at 19
292
Abir Roy, Adoption of rule of reason in Resale Price Maintenance under the Indian competition law:
Rule of reason, Kluwer Competition Law Blog, January, 2016, retrieved from
http://kluwercompetitionlawblog.com/2016/01/16/adoption-of-rule-of-reason-in-resale-price-maintenance-
under-the-indian-competition-law-rule-of-reason/, last accessed on 25-05-2017
293
Factors laid down under 19(3) are as follows-
(i) creation of barriers to new entrants in the market;
(ii) driving existing competitors out of the market;
(iii) foreclosure of competition by hindering entry into the market;
(iv) accrual of benefits to consumers;
(v) improvements in production or distribution of goods or provision of services;
(vi) promotion of technical, scientific and economic development by means of production or distribution of
goods or provision of services.
294
CCI v. SAIL, Civil Appeal No.7779 OF 2010 at para 13, pg 61

54
appliances in India, the Commission is of the view that with a market share of 28% the
restrictions imposed by the Opposite Party on its dealers through the above said anti-
competitive agreement, prima facie, may not only harm the consumers but also are likely
to have an adverse effect on competition in India.”295

CCI took into consideration just the market share of the OP. Also, it was concluded that
this market share “may harm consumers” and is “likely to have appreciable adverse
effect”. But it is doubtful whether such harm or AAEC has not been demonstrated even at
bare minimum level. CCI completely relied on market share and ignored the other
important factors that should have been considered for this purpose.

Another issue with the decision is that by regarding 28% market share as likely to cause
AAEC, CCI has kind of laid down a threshold for initiating investigation. This would
mean that any enterprise entering into any vertical agreement under section 3(3) would be
considered as having AAEC. In this context, it is pertinent to mention here that European
Commission follows a 30% market share for block exemptions, i.e. if the market share of
supplier and buyer each does not exceeds 30%, agreements are not caught under Article
101(1).296

According to the preliminary findings of e-commerce sector enquiry conducted by

European Commission, 1/3rd retailers had to follow the price recommendations by
manufacturers.297 Retail prices are also being tracked by the manufacturers, either
manually (67%) or/ and also with the help of automated software (40%).298 Price tracking
is not just done by manufacturers but also by the retailers, who use this data to adjust
their own prices (78%).299

Such acts are likely to have various effects on e-commerce. For example, this ease in
tracking of price is because of increased price transparency which leads to detection of

295
Supra note 69 at 16
296
European Union, Commission Regulation (EU) No 330/2010 on the application of Article 101(3) of the
Treaty on the Functioning of the European Union to categories of vertical agreements and concerted
practices, April 2010, Article 3
297
Supra note 3 at125
298
Ibid.
299
Ibid.

55
any deviation very easily. Such deviation may be from price recommended by
manufacturer or from collusion between retailers.300

Resale Price Maintenance is included in the hardcore restrictions by the European

Commission.301 It includes RPM agreements or concerted practices to the extent that, “
have as their direct or indirect object the establishment of a fixed or minimum resale
price or a fixed or minimum price level to be observed by the buyer.”302

European Commission’s regulations on block exemption provide that price

recommendations must "not amount to a fixed or minimum sale price as a result of
pressure from, or incentives offered by, any of the parties"303 Under EU competition
regime, recommending certain resale price by suppliers or manufacturers and to have
concurrence on maximum price with the distributor is allowed, but it is prohibited to fix
resale and minimum prices.304

In this context it is interesting to look at CIBA Vision case. CIBA Vision is the largest
manufacturer of contact lenses in Germany.305 The Federal Cartel Office found that the
company was imposing Resale prices on its distributors as well as restricting them to sell
the products through internet.306 Other than this, CIBA maintained a system to monitor
the prices of its distributors in order to ensure that its recommended prices were being
followed. It also entered into agreement with eBay that required the marketplace to not
list any offers in its platform to sell the products of CIBA. A fine of EUR 11.5 Million
was imposed on the company.307The FCO said that although a recommended retail price
is permitted under the law but if it imposed on the distributors by using pressure, it will

300
Supra note 3 at 553-555
301
Supra note 71 at 4(a)
302
European Commission, COMMISSION NOTICE Guidelines on Vertical Restraints , 2010, at 48
303
Supra note 76
304
Jones Day, German Federal Cartel Office steps up the enforcement against resale price maintenance,
November 20,2009, retrieved from http://www.lexology.com/library/detail.aspx?g=de4643bd-5d85-48a0-
8f12-805762035287, last accessed on 24-05-2017
305
Bundeskartellamt imposes fine on CIBA Vision, 25 Sept,2009, retrieved from
http://www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2009/25_09_2009_Ciba-
Vision.html
306
Ibid.
307
Ibid.

56
 308
amount to an anti-competitive act. If the supplier is taking any further actions, after
recommending the prices, like monitoring it and repeatedly emphasising it, it will amount
to exerting pressure on the distributors.309

In another instance, FCO investigated against several mattress manufacturers in 2015

that were imposing RPM on online sales by their distributors.310 The price restrictions
were accompanied by threat of negative consequences, in case the prices recommended
by the supplier were not followed by the retailers, such as delay in supply, to cease the
supply, or withdrawing the right of the retailer to use the name of the brand for
advertising.311 Therefore, Bundeskartellamt fined Metzeler Schaum GmbH with 3.38
Million Euros,312Recticel Schlafkomfort GmbH, Bochum with 8.2 Million Euros313and
Tempur Deutschland GmbH, Steinhagen, with 15.5 Million Euros314

3.5 EXCLUSIVITY AGREEMENTS:

Exclusive dealing with some distributors and therefore refusing to deal with other
retailers has always raised many competition law infringement claims. But all the
exclusive dealing agreements are not per se anti-competitive. The reason behind this is
that there may be some kind of objective justification for entering into such agreements
like protection against free riding, new entrant entering a market, etc. Such agreements
are deemed anti-competitive under Indian Competition regime if they have or are likely

308
Jörg Witting, Fabian von Busse , Federal Cartel Office fines CIBA Vision and Phonak for unlawful
retail price maintenance, 26 October 2009, retrieved from
https://www.twobirds.com/en/news/articles/2012/fco-fines-ciba-vision-phonak-unlawful-retail-price-
maintenance, last accessed on 31-05-2017
309
Ibid.
310
Silke Heinz and Alex Petrasincu,'Germany/Commentary', Ymke Hofhuis (ed), Competition Law in
Western Europe and the USA 1, 50(2016)
311
Bundeskartellamt concludes mattress case with another fine, 22.10.2015, retrieved from
http://www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2015/22_10_2015_Tempur.
html
312
Further fine imposed for resale price maintenance in mattress case, 06-02-2015, retrieved from
http://www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2015/06_02_2015_Matratze
.html
313
Ibid.
314
Supra note 86

57
to have appreciable adverse effect on the competition.315 Whether such agreements are
having any appreciable adverse effect or not, has to be assessed on the basis of factors
provided under section 19(3) of the act, such as barriers to entry, foreclosure effect,
benefits to consumers, etc.

In Mohit Manglani v. Flipkart, it was alleged that the e-portals were indulging in
exclusive agreements with the sellers that were having anti-competitive effects. The
informant alleged that Chetan Bhagat’s novel “Half Girlfriend” was being sold
exclusively on Flipkart, due to which the customers were compelled to accept any
conditions or prices that were laid down by Flipkart. Similarly, many other e-portals were
entering into exclusive agreements in relation to certain products that were alleged to
have appreciable adverse effect on the market.316 The commission took into consideration
the factors mentioned under section 19(3) and observed that the exclusive agreements
between OPs and retailers were not having any appreciable adverse effect on
competition, as it does not seem to create any entry barrier for new players. Instead, the
number of online players and e-portals has been growing and so is the competition.317
Also, the services by these online players have proved to be of great benefit to the
consumers.318 Also, to check the allegation of abuse of dominance, the substitutability of
the exclusively available product, i.e. that product in question is to be checked by
determining a proper relevant market and the product can’t be characterised as a relevant
market in itself.319So it was concluded that the exclusive agreements in this case didn’t
appear to have any AAEC on the competition.320

However, this is a very pertinent issue prevailing in this segment. For example, OnePlus
smart phone could not be procured by customers from any offline retailer or from any
other online platform as it was available exclusively on Amazon. 321 If any informant
would have alleged anti-competitive conduct by Amazon, CCI would have to look into

315
Supra note 29 atSec 3(4)
316
Case no 80 of 2014, para 2
317
Id. at 16
318
Id. at 17
319
Id. at 18
320
Ibid.
321
From March 2017, the company started selling it through their online website as well.

58
various factors that prove that AAEC has been caused. After determining the relevant
market by taking into consideration the substitutable products, the market share of
OnePlus will have to be considered.322 If its market share is substantially high amongst
other substitutes, the chances of the exclusive agreement causing AAEC are likely to be
very high. But if it does not have any negative effects as mentioned under 19(3), the
claim will not sustain.

In Ghanshyam Dass Vij v. M/s Bajaj Corp. Ltd and ors, CCI explained exclusive
distribution agreements as, “An arrangement between the supplier and distributor
wherein the distributor sells the product/s within a defined area or to a particular group /
category of customers.”323

In this case, CCI observed that such exclusive agreements affect intra brand as well as
inter brand competition, by restricting entry of new players and obstructing competition
among distributors because of limited number of outlets. However, this does not make
them anti-competitive because some of them can be justified on basis of “protection from
free riding, efficient management of sales of products, economic efficiency, etc.” 324 Only
the arrangements that cause AAEC will be under purview of section 3(1). In this case, the
DG report could not show any AAEC caused by the said vertical restraint and the
commission held that no case can be made out against Bajaj.325

Sometimes, exclusive agreements may be on basis of territory or customer groups. The

preliminary report of EU’s sector enquiry deals only with territorial exclusive distribution
agreements. In territorial EDAs, manufacturer appoints only one retailer or distributor in
one territory or a particular area. This kind of exclusivity can have negative impacts, such
326
as reduction in intra-brand competition. But in some cases this may be justified for
protecting the distributor’s investment against free riding.327 The use of exclusive

322
Divye Sharma, India: Competition Law And E-Commerce: A Concern For The Future, May 27, 2015,
retrieved from http://www.mondaq.com/india/x/400368/Antitrust+Competition/Competition+Law+And+E-
commerce+A+Concern+For+The+Future, last accessed on 16-05-2017
323
Ghanshyam Dass Vij v. M/s Bajaj Corp. Ltd. And ors., Case No. 68 of 2013, Para 75
324
Ibid.
325
Id. at 81
326
Supra note 3 at 177
327
Ibid.

59
agreements is decided by manufacturers on the basis of characteristics of product, brand,
conditions of market, etc. and is generally considered necessary while launching a
product in a new market.328

Under EU competition regime, such agreements are exempted under Vertical Block
exemptions if the share of each party is less than 30 % and it does not falls under any of
the hardcore restrictions.329

3.6SELECTIVE DISTRIBUTION AGREEMENTS

It refers to a system of distribution where manufacturer/supplier lay down certain criteria

in the distribution agreement and only the distributors who fulfil such conditions are
330
appointed as retailers. Selective distribution agreements might seem similar to
exclusive distribution agreements as both are aimed at restricting the number of
distributors authorised by the manufacturer. But the Guidelines on Vertical Restraints
point out the difference between selective distribution agreements and exclusive
agreements. It mentions that in exclusive agreements, number of dealers are dependent on
number of territories, or are restricted, whereas in selective distribution, number of
dealers depends upon the dealers fulfilling the selection criteria, i.e. it is not fixed.331 In
context of restriction on resale, exclusive agreements restricts active sale to a territory,
whereas in selective distribution sale is restricted to unauthorized dealers and product can
be sold only to customers or to the appointed dealers.332

Another difference with exclusive distribution is that the restriction on resale is not a
restriction on active selling to a territory but a restriction on any sales to non-authorised

328
Id. at 193
329
European Commission, Guidelines on Vertical Restraints ,2010, Para 152 says, “Exclusive distribution
is exempted by the Block Exemption Regulation when both the supplier's and buyer's market share each do
not exceed 30 %, even if combined with other non-hardcore vertical restraints, such as a non-compete
obligation limited to five years, quantity forcing or exclusive purchasing”
330
Para198
331
Supra note 71 at 2.4
332
Ibid.

60
distributors, leaving only appointed dealers and final customers as possible buyers.
Selective distribution is almost always used to distribute branded final products.”333

According to the e-commerce sector inquiry conducted by European Commission, this

has been one of the main reactions of the manufacturers to the growth of e-commerce.334
The sector inquiry conducted by European Commission shows that around 56%
manufacturers are using such agreements and it is mostly used by manufacturers having
high turnovers.335Some manufacturers consider the use of selective distribution as
necessary to protect their brand image, ensure high quality pre and post sale services, to
guarantee personalised advice and attention to customers by qualified staff, prevent free
riding and increase traceability of products so that they can be protected against
counterfeit goods.336

It was observed by the commission that the criteria followed in such agreements
generally lack objectivity and transparency.337 In some cases, the criteria may go beyond
what is essentially required. For example, the conditions laid down in such agreements by
most of the manufacturers exclude the players who are engaged in pure online
business.338 The remaining manufacturers, who accept online players as a part of their
distribution system, require such retailer to have atleast one brick and mortar shop for the
supplied products.339

The selective distribution agreements are not prohibited under EU competition law,
provided that, “the distribution network is selected on basis of some qualitative and
objective criteria that is not discriminatory and is uniformly applicable for all potential
retailers and that the characteristics of the product in question necessitate such a
network in order to preserve its quality and ensure its proper use and, finally, that the
criteria laid down do not go beyond what is necessary.”340 Also, under the Vertical Block

333
Supra note 77 at 174
334
Supra note 3 at223
335
Id.at205
336
Id.at209
337
24% manufacturers responded that they do not communicate their selective distribution criteria to
retailers. Rest 76% said they necessarily do not communicate it in all cases.
338
Supra note 3 at220
339
Supra note 3 at220
340
Id. at224

61
Exemption Regulation such selective distribution agreements are exempted if the share of
both supplier and buyer each is less than 30 % and are not covered under any hardcore
restrictions.341

Since such agreements are not per se anti-competitive, but may include certain clauses or
criteria that are not justifiable and go beyond what is actually necessary and hence may
342
rule out many potential retailers. Such clauses are likely to have anti-competitive
effect and commission may feel the need to carry out assessment on a case to case basis
with regard to specific clauses that are likely to have restrictive effect on sales in online
market.343

The Commission’s regulation on vertical agreements, in its article 4, talks about hardcore
restrictions (restriction by object) to which the benefit of block exemption cannot be
extended. 344 These hardcore restrictions include –

(i) Restriction on any kind of sales to end users by members of a selective distribution
system at retail level.345

(ii) Restriction of cross-supplies between members of selective distribution

system(distributors).346

One of the contractual clauses specially used in majority of selective distribution

agreements is imposing a restriction of distributor with regard to sale of products through
online marketplaces. A ban on sale through internet is generally regarded as a hardcore
restriction under EU Antitrust law.

In Pierre Fabre v. Autorité de la Concurrence , Court of Justice held that a ban on sale
through internet in context of a selective distribution system will amount to a restriction
by object or an hardcore restriction which will not get benefit of Block exemptions.347

341
Supra note 77 at 176
342
Supra note 3 at232
343
Id. at907-909
344
Supra note 71
345
Supra note 71 at 4(c)
346
Supra note 71 at 4(d)
347
Case C-439/09

62
But whether such ban would get any exemption under article 101(3), was not dealt with
by court due to lack of information in this case.348

In one of the cases, Adidas made use of a selective distribution agreement that restricted
the distributors from using online marketplaces or platforms to market its products.349 An
administrative proceeding was started by Bundeskartellamt to look into the matter but
was later was terminated at a very early stage after Adidas agreed to remove the
particular restriction and lift the ban it had imposed on its distributors regarding sale on
third party internet platforms.350

Similarly ASICS (market leader for running shoes in Germany) had used a selective
distribution system to choose its distributors. Through this selective distribution, a
restriction was put on distributors to use price comparison websites and a ban on using
the brand’s name to sell products over marketplaces or third party platforms.351 The
German Federal Cartel Office (FCO) held that the selective distribution system that
causes ban on online sales through third party platforms and also restricts the use of price
comparison tools by the distributors is in violation of European competition laws.352 This
decision of Bundeskartellamt was later confirmed by Düsseldorf Higher Regional Court
in context of price comparison tools. The court held that, “the general prohibition of the
use of price comparison engines is a restriction of competition by object.”353 However,
the question concerning the selective distribution system putting ban on sale via
marketplaces was left open.

348
Tilottama Raychaudhuri, Vertical Restraints in Competition Law: The Need to Strike the Right Balance
between Regulation and Competition, 4(4) NUJS L. Rev. 609, 618 (2011)
349
Bundeskartellamt, Adidas abandons ban on sales via online marketplaces, Case Ref: B3-137/12, June
27,2014
350
Bundeskartellamt, Adidas abandons ban on sales via online market places,Case B3-137/12, July 02,
2014
351
Bundeskartellamt, Unlawful restriction of online sales of ASICS running shoes, August 27, 2015
Case B2 – 98/11
352
353
Bundeskartellamt Press Release, Düsseldorf Higher Regional Court confirms Bundeskartellamt's
decision on prohibition of use of price comparison engines, 6 April 2017

63
But this decision of FCO was partially contradicted in another decision given by the
Higher Regional Court of Frankfurt on 22 December 2015. 354 This case related to
German backpack producer Deuter Sport GmbH, which introduced a selective
distribution system for its distributors. Under this selective distribution, the distributors
were prohibited from selling its products online over third party platforms or to indulge
with any price comparison website, without the prior approval of Deuter. The court said
that any manufacturer has the right to protect its brand’s image and to ensure high level
of sale services. In this course of action, he is free to decide the sale conditions that are
best to ensure proper sale services and to maintain the brand’s image, provided that such
conditions are essential. The court also observed that in case of sale via online
marketplaces, the manufacturer is in no contractual relationship with the marketplace and
hence keeping a check on the standards of the products and services becomes difficult.355

Hence it was held that Deuter’s action of banning its authorized distributors from selling
the brand’s products over internet through marketplaces was not an illegal practice but a
legitimate one. However, a restriction on use of price comparison websites was held
illegal, as it had no objective justification for protecting the quality standards or brand’s
image.

3.7 RESTRICTION WITH REGARD TO SALE ON

MARKETPLACES:

Marketplaces are a very important channel of sale, especially for small and medium sized
retailers, as it allows them to sell online with least initial investment. The following table
shows different channels used by retailers for selling online:

354
Global Antitrust Alert: Online Third Party Platform Ban for Branded Backpacks is legal, German Court
says, Competition Regulation and Trade e-bulletin, December 2015, retrieved from
http://documents.lexology.com/1af447a9-83fa-4ba0-88d1-c213d40f4175.pdf, last accessed on 22-05-2017
355
Supra note 129

64
 Selling Model Proportion

Retailers using only their online 61 %

shops

Retailers selling via their online 31%

shops as well as on marketplaces

Respondent retailers sell online only 4%

via marketplaces

Table: Channels used by retailers for selling online

Not using marketplace as a mode of sale by the retailer may be his unilateral business
decision, or a restriction imposed by the manufacturer.356 Generally such restrictions are
imposed as a part of selective distribution agreements.357Also, the restrictions imposed by
manufacturers may be in the form of absolute bans (not allowed to sell on any of the
marketplaces) or qualitative criteria based restrictions (allowing sale on marketplaces that
fulfil certain laid down criteria).358

Manufacturers have put forward a number of reasons for marketplace restrictions such as
protecting the image of the brand, fighting the counterfeit products, avoiding free-riding,
quality pre and after sale services, etc. But the marketplaces believe that the reasons for
such restrictions is the fear of manufacturers regarding increasing price transparency and
price competition, as customers are able to buy at lowest prices by comparing price
offered by different seller. By imposing such bans, manufacturers are able to reduce price
transparency and hence the competitive pressure on price is reduced.359

356
Supra note 3 at428-430
357
Id. at436
358
Id. at431-435
359
Id.at 455

65
Whether marketplace bans constitute hardcore restrictions, i.e. have the restriction of
competition as their object, is still a open question, as they are not specifically mentioned
under Vertical Block Exemption Regulation. Although the Pierre Fabre decision stated
that, “a ban on the use of the internet as a method of marketing has as its object the
restriction of passive sales and can be considered a restriction by object pursuant to
Article 101(1) TFEU and a hardcore restriction under Article 4(c) Vertical Block
Exemption Regulation.” 360
So according to this decision, a marketplace ban would
qualify as hardcore restriction only when it is equated to “a total ban on use of internet
for marketing.”361

The report does not show that such bans amount to “de facto prohibition to sell online.”
as the retailers do have other mediums to sell online362Also, these restrictions are on
“how” the retailer can sell its product online, and not have the object to restrict the
territory or customer to whom he can sell it.363 However this does not mean that
marketplace bans are declared as compatible with competition law. In cases where
market share of parties exceed 30% threshold or agreement contains any other hardcore
364
restrictions, commission may take up investigation in such cases. Therefore, whether
such restrictions will have anti-competitive effects, should be analysed on the basis of
facts and circumstances of individual cases.365

One of the most widely used clause in selective distribution agreements that target online
sales is imposing a ban on distributors from using marketplaces or third party platforms
for selling goods of the manufacturers. The Commission’s Vertical Restraint Guidelines
provides that a just as a manufacturer may lay down certain standards for selling of his
goods through brick and mortar shops, similarly he may set conditions related to selling
of goods through internet and says, “ supplier may require that its distributors use third

360
Pierre Fabre Dermo-Cosmétique SAS v. Président de l’Autorite de la concurrence,EU:C:2011:649, at 47
and 54
361
Supra note 3 at468
362
Id. at 469
363
Article 4 (b) of the Vertical Block Exemption characterizes those agreements as hardcore restriction,
which have as their object the restriction of the territory into which, or of the customers to whom, a buyer
party to the agreement, without prejudice to a restriction on its place of establishment, may sell the contract
goods or services.
364
Supra note 3 at 473
365
Id. at 915

66
party platforms to distribute the contract products only in accordance with the standards
and conditions agreed between the supplier and its distributors for the distributors' use of
the internet.”366 Therefore it can be said that under vertical guidelines marketplace bans
may be allowed. But it is to be noted that guidelines issued by Commission are not
binding but just guiding factors.367

In the Adidas case discussed earlier, as a part of its selective distribution system, Adidas
had put a ban on use of marketplaces (Amazon, EBay, Rakuten, etc) by its distributors.
The German authorities started investigation and informed Adidas that such a ban gives
rise to competition concerns. After getting the information, Adidas renewed its terms and
conditions relating to selective distribution and the clauses imposing ban on use of
marketplaces were removed. The authorities eventually dropped the investigation against
Adidas after Adidas changed its policies.368

In 2013, Sennheiser, through its selective distribution system had imposed a ban on its
authorized distributors with regard to sale of its electronic products through third party
platforms like Amazon and eBay. However, it was noted by the court that Amazon itself
was an authorized distributor of Sennheiser. Therefore, FCO stated that such a restriction
was not a qualitative criteria and could not be justified as necessary to protect brand
image or to provide quality services, as the marketplace is itself integrated to its services
as an authorized distributor.369 Sennheiser removed this restriction and lifted the ban on
third party platforms before any formal proceedings were started against it, following
which the investigation was terminated by FCO.370

366
Supra note 77 at 54
367
Supra note 85 at 7
368
Supra note 124
369
Gabriele Accardo, German Federal Cartel Office spares Sennheiser’s online policy from scrutiny, 5
TTLF Newsletter on Transatlantic Antitrust and IPR Developments, December 2013,
https://ttlfnews.wordpress.com/2014/01/11/transatlantic-antitrust-and-ipr-developments-issue-no-5-62013-
december-30-2013/, last accessed on 25-05-2017

370
Silke Heinz, Ban on sales via third-party internet platforms in Germany and Pierre Fabre – recent referral
to the Court of Justice, June 6, 2016, retrieved from http://kluwercompetitionlawblog.com/2016/06/06/ban-
on-sales-via-third-party-internet-platforms-in-germany-and-the-impact-of-pierre-fabre-on-selective-
distribution-referral-to-the-court-of-justice-in-coty/

67
However, in Deuter Sport GmbH ( branded backpack case), the marketplace ban was
considered as a qualitative and justified criteria imposed by the manufacturer to protect
the brand’s image.371

As one may notice, Germany has taken a strict approach towards ban on marketplaces
(Adidas and Asics rulings).However, whether such bans amount to infringement of
Article 101(1) is still under review by CJEU in Coty Germany GmbH v. Parfümerie
Akzente GmbH.372 This case relates to marketplace ban by a perfume manufacturer. The
main argument given in favour of this restriction was the protection of luxury brand items
from counterfeit products being sold online.373 The German Higher regional court has
forwarded it to Court of Justice of the European Union and the decision of CJEU is still
awaited.

Although the selective distribution agreements can be justified as necessary to protect the
brand image and services, Federal Cartel Office (FCO) has maintained that imposing
restrictions on selling via marketplaces will not qualify as an objective justification that is
necessary to protect the image of brand.374 Generally, the small retailers depend upon
such platforms to increase their visibility and to attract customers, as the platforms like
Amazon and eBay have a wide reach. Imposing such restrictions act as a disadvantage
against such retailers. These restrictions effect the intra brand competition in the market
and hence are anti-competitive.375 But as far as German courts are concerned, in some
cases it has followed the above path376 whereas in certain other cases it has held such
bans as justified and permissible. 377

371
Supra note 129
372
Case C-230/16
373
Miranda Cole, Jennifer Boudet, German Court sends online sales bans to ECJ, April 29, 2016, retrieved
from https://www.covbrands.com/2016/04/29/german-court-sends-online-sales-bans-to-ecj/, last accessed
on 25-05-2017
374
Supra note 85 at 7
375
Asics (Case B2 – 98/11)
376
Schleswig Court of Appeal decision of 5 Jun. 2014, Case 16 U 154/13(distribution of digital cameras);
and Regional Court of Frankfurt decision of 31 Jul. 2014, Case 2-03 O 128/13 concerning cosmetics)
377
Munich Court of Appeals, decision of 2 Jul. 2009, Case U (K) 4842/08( sporting goods); Frankfurt
Court of Appeals, decision of 22 Dec. 2015, Case 11 U 84/14 ( branded backpacks)

68
In a nutshell we can see diverging opinions in the vertical guidelines issued by the
commission, decisions of FCO and those of German courts.

3.8 POTENTIAL ANTI-COMPETITIVE ISSUES IN PAYMENT

THROUGH DIGITAL WALLETS:

Prepaid payment is one of the most prominent features of e-commerce. Digital wallets
have come up in the form of intermediaries to ensure a secure payment mode for the
customers. Especially after demonetisation of Rs. 500 and Rs. 1000 currency notes, the
country has seen a drastic shift towards a cashless economy. During the phase of cash
crunch, many users have shifted towards these e-wallet services, giving a boost to this
payment method. 378

Earlier PayPal was the most prominent computer digital wallet. But now many mobile
wallets have come up, making it easier for customers to shop and pay through e-
commerce.379 Post demonetisation, Paytm claimed that it witnessed 100% increase in the
380
amount that is being added to its wallets. Also, the number of downloads for the app
witnessed a growth by 300%.381 There were speculations that Paytm may abuse such
dominant position. But what needs to be kept in mind is that Strategies and practices of
such firms have been changing drastically. To assess dominance, not only market share,
but other factors also need to be taken into consideration such as intensity of competition,
prevalent competitors, and possibility of new entrants who have potential to capture a

378
Demonetisation effect: Here’s how to sign-up for Paytm, Mobikwik and use the e-wallets, Indian
Express, November 14, 2016, retrieved from http://indianexpress.com/article/technology/tech-news-
technology/demonetisation-effect-heres-how-to-sign-up-for-paytm-and-mobikwik-4374672/, last accessed
on 10-05-2017
379
Anmol Verma, Effects of Demonetization on E-Commerce & Online Payments, Dec 28, 2016 , retrieved
from http://www.digitalvidya.com/blog/demonetization-effects-on-e-commerce-online-payments/, last
accessed on 20-05-2017
380
Arushi Chopra, Paytm claims record number of transactions after govt’s demonetization move, 14
November 2016; retrieved from http://www.livemint.com/Companies/gWu18E6zIzsI0tfsANYsFL/Paytm-
claims-record-number-of-transactions-after-govts-demo.html, last accessed on 11-05-2017
381
Ibid.

69
substantial part of dominant firm’s shares.382

The internet economy is a dynamic market as compared to offline market. The fact that
players such as yahoo, orkut and eBay that were once the favourite of users have lost
their market is a proof that the market position or dominance is short-lived and the
market is market by innovation.383

The digital wallets can be in general characterised as an oligopolistic market. So in such a

market, the firms generally indulge in non-pricing competition, i.e. they compete on
quality and services and non on prices.384 The aim is to prevent customers from switching
to rivals, by offering better and differentiated services. The digital wallet firms are
constantly trying to improve services and add new features and face a continuous threat
that a new entrant might bring in some better innovation. For example, a digital wallet
“Transerv” brought about a new innovation in the name of “Udio” that can be used to
make not only online payments, but offline payments as well.385

So, innovation is an important factor in this market. The market is also characterised by
network effects, which play an important role in deciding the position of a firm in market.
Also, a firm bringing in new technology, for example paytm, will always have an
advantage with the choice to license its technology on its own terms. Such agreements
may attract concerns from the authorities if the commercial arrangement is made on
unfair terms.386

One of the most attractive features of these wallets is that they offer cashback to the
users, which can be used for making other purchases, recharges, etc. The All India Online
Vendor Association (AIOVA) and many other offline retailers have been alleging the
practices of predatory pricing in e-commerce. AIOVA has alleged that Paytm is

382
Ball Mem’1 Hosp., Inc v. Mut. Hosp. Ins., Inc., 784 F.2d 1325, 1336 (7th Cir. 1986) ("Market shares
reflects current sales, but today’s sales do not always indicate power over sales and price tomorrow")
383
David S. Evans, et al., The Failure of E- Commerce Business: A Surprise or Not? European Business
Organization Law Review 1, 7 (2002)
384
Supra note 1 at 561
385
ASSOCHAM India, M-Wallet : Scenario Post Demonetisation, At pg 17, retrieved from
http://www.assocham.org/upload/docs/M-Wallet_Report_press.pdf, Last accessed on 11-05-2017
386
Swarnim R. Shrivastava, Currency reforms in India and competition concerns of the digital wallet sector,
38(3) European Competition Law Review 140, 141(2017)

70
infringing the FDI guidelines laid down by DIPP that require e-commerce entities to
maintain level playing field and not try to influence sale prices. It has been claimed that
Paytm is using cashbacks to influence pricing. Also such cashback and the purchases for
which it can be used are offered in respect of selected sellers, which, therefore, do not
proving a level playing field.387

It is yet to be determined whether such offers are put to use just in order to create a new
market for the firm by attracting customers or with the aim of disturbing the prevailing
competition in the market.388

The other concern in relation of the digital payments is tying and bundling practices.
Here, the term ‘tying’ is being used in a technical sense that the services are designed in a
way that the tying service works best only with the tied service and so the customer uses
389
only the services of tied product and not those offered by the rivals. It can be seen that
the e-wallets are using their market power in one service to tie-in the other services. For
example, Paytm has used its market power in the services of online payment to enter into
e-commerce sector by making partnerships with mother diary, Dominos, Pizza Hut, Big
Bazaar, etc. Similarly, Freecharge tied up with Snapdeal and Mobikwik has tied up with
Grofers, Lemontree, Indigo, Yatra and Big Basket.390

The advancement of technology and change in the system of payment in online sector has
themselves posed serious issues for the competition authorities. The authorities not only
need to understand how these systems work, but also to figure out and address the issues
which may pose serious threat to the competition. Many complaints have been filed to
CCI with regard to the issues discussed here and one may have to wait for more CCI

387
Anirudh Saligrama, CCI To Look Upon Cashback Platforms Regarding Its Practice Of Predatory
Pricing, 17 May, 2016, retrieved from http://techstory.in/cci-to-monitor-cashback-17052016/, last accessed
on 11-05-2017
388
Swarnim R. Shrivastava, Currency reforms in India and competition concerns of the digital wallet sector,
38(3) European Competition Law Review 140, 142(2017)
389
Ibid.
390
Shephali Bhatt, Use e-wallet, get cash back: Industry norm that needs to be challenged ,Economic Times,
18 February, 2016, retrieved from http://economictimes.indiatimes.com/brand-equity/use-e-wallet-get-
cash-back-industry-norm-that-needs-to-be-challenged/articleshow/51008700.cms, last accessed on 11-05-
2017

71
orders to get more clarity on the issues.391

3.9 MERGERS AND ACQUISITIONS IN E-COMMERCE

Any combination, whether online or offline, which may have effect on Indian market, is
to be reported to CCI under section 6 of the act. In 2015, out of approximately 930
Combinations in India (valued at $26.3 Billion), 259 M&A related to e-commerce
sector(USD 2.43 Billion).392 It is estimated that a total of 930 M&A deals with a
cumulative value of USD 26.3 Billion took place in India in 2015, of which 259 deals
worth USD 2.43 Billion pertained to the e-commerce industry.393

The Competition Act prohibits an enterprise from entering into any merger or acquisition
which causes or is likely to cause an appreciable adverse effect on competition. 394The act
also declares that in case any such combination is entered into, it shall be void. 395 There
are certain factors that the Commission needs to take into consideration for the purpose of
determining whether a combination causes AAEC or not. 396

391
Rajat Arora, Are cashbacks by cos like Paytm and Mobikwik predatory pricing?, Economic Times, 17
May 2016, retrieved from http://tech.economictimes.indiatimes.com/news/startups/are-cashbacks-by-cos-
like-paytm-and-mobikwik-predatory-pricing-cci-to-decide/52302875, last accessed on 11-05-2017
392
Delloitte and CII, E-Commerce in India A Game Changer for the Economy, April 2016 at 10, retrieved
from http://italiaindia.com/images/uploads/pdf/april-2016-e-commerce-in-india.pdf, last accessed on 21-
05-2017
393
Ibid.
394
Supra note 29 atSec. 6(1)
395
Ibid.
396
The Competition Act 2002, Sec. 20(4): For the purposes of determining whether a combination would
have the effect of or is likely to have an appreciable adverse effect on competition in the relevant market,
the Commission shall have due regard to following factors, namely:—
(a) actual and potential level of competition through imports in the market
(b) extent of barriers to entry into the market;
(c) level of combination in the market;
(d) degree of countervailing power in the market;
(e) likelihood that the combination would result in the parties to the combination being able to significantly
and sustainably increase prices or profit margins;
(f) extent of effective competition likely to sustain in a market;
(g) extent to which substitutes are available or arc likely to be available in the market;
(h) market share, in the relevant market, of the persons or enterprise in a combination, individually and as a
combination;
(i) likelihood that the combination would result in the removal of a vigorous and effective competitor or
competitors in the market;
(j) nature and extent of vertical integration in the market;
(k) possibility of a failing business;
(I) nature and extent of innovation;

72
This section analyses the mergers and acquisitions in e-commerce sector and the
approach of CCI towards them. The first one includes Snapdeal and Alibaba. An
application was filed to seek approval for acquisition of newly-issued compulsorily
convertible preference shares (“CCPS”) of Jasper Infotech (operator of Snapdeal) by
Alibaba.397 The parties submitted that if the transaction is approved, the acquirer would
hold less than 5% of equity share of the target company, which is a non-controlling
minority stake. The commission held the view that both the companies are competitors
and the acquisition of even less than 5% non-controlling minority stake may not be an
acquisition done in the normal course of dealing just for the sake of investment.398

The parties submitted that there is no kind of vertical relation between them and although
there is a horizontal overlap, still they do not have a significant market power to cause
any appreciable effect on competition. 399 The commission, on considering the factors for
the purpose of determining appreciable effect of a combination, formed the opinion that
the proposed acquisition is not likely to have AAEC and hence approved the
combination.400 However, in such approvals, a condition is laid down by the commission
that such approval can be revoked if any information provided by parties is incorrect.

Another merger that needs to be mentioned here is the one that was approved by CCI in
January 2017 between India’s two largest online travel booking platforms, namely
Goibibo and Makemytrip.401 It was observed by the Commission that the overlapping
segment of the activities of the parties is providing travel services in India. 402 The
services provided by parties through different channels have both online and offline
presence. 403Also, the services provided by parties are also offered by various other travel

(m) relative advantage, by way of the contribution to the economic development, by any combination
having or likely to have appreciable adverse effect on competition;
(n) whether the benefits of the combination outweigh the adverse impact of the combination, if any.
397
Combination Registration No. C-2015/08/301, October 7, 2015
398
Id. at 3
399
Id. at 8,9
400
Supra note 29 atSection 20(4)
401
Vikas SN, CCI nod to MakeMyTrip, Ibibo Group merger, Jan 21,2017, Economic Times, retrieved from
http://economictimes.indiatimes.com/news/company/corporate-trends/cci-nod-to-makemytrip-ibibo-group-
merger/articleshow/56695785.cms, last accessed on 19-05-2017
402
Competition Commission of India, Combination between MIH Internet SEA Pte Ltd and Makemytrip
Limited, Fair Play, January 2017 at 37
403
Ibid.

73
channels and are considered as substitutable by the customers.404 Therefore, the market
for “sale of travel and travel related services” in India was identified as the relevant
market. In this particular relevant market of travel services, there was a significant
presence of competitors and the combined market share of the parties would not have
amounted to more than 11%. The Commission observed that these factors do not indicate
that any appreciable adverse effect is likely to be caused by this combination and hence it
was approved.405

It is estimated that the merged entity will have a market share of 70% in online hotel
406
booking segment and that of 60% in online flight booking. Also, the transaction is
being valued at more than $ 1.8 billion, which has changed the dynamics of this industry
drastically and created a huge void that will be very difficult to be filled up by existing
players for gaining the second position.407 The competitors in this segment are afraid that
this might pose serious competition issues in future because of the creation of a
monopoly like situation.408 Goibibo and Makemytrip were undoubtedly one of the
leading online platforms, that competed on prices and eventually the customers were
benefitted in the form of various discounts or coupons offered to them. 409 This merger
might mark an end to the customer’s delight.

The same situation had aroused after the acquisition of Myntra and Jabong by Flipkart.
Earlier, both Myntra and Jabong were competing on prices in the online fashion market.
Flipkart gained a significant position in this segment after acquiring both the competing
platforms, which allowed it to cut down on the offered discounts.410

404
Ibid.
405
Ibid.
406
Jai Vardhan, How the MakeMyTrip-goibibo merger is set to impact the status quo in the OTA segment,
Oct 19,2016, retrieved from https://yourstory.com/2016/10/makemytrip-goibibo-merger/, last accessed on
19-05-2017
407
Biswarup Gooptu, MakeMyTrip-Ibibo merger leaves no room for Number 2 in online travel space,
Economic Times, Oct 24,2016, retrieved from http://economictimes.indiatimes.com/small-
biz/startups/makemytrip-ibibo-merger-leaves-no-room-for-number-2-in-online-travel-
space/articleshow/54969313.cms, last accessed on 19-05-2017
408
Ibid.
409
Ibid.
410
Supra note 181

74
Another acquisition that may be noted here is that of Jabong by Flipkart’s unit Myntra.411
This acquisition of two leading players in fashion segment by Flipkart has provided it an
edge over Amazon and Snapdeal. Although Amazon also deals in fashion segment, but
customers generally prefer buying apparels and other fashion products from a specialised
platform like myntra or jabong.412 With Jabong dealing with mostly international high
end brands like Tom Tailor, Dorothy Perkins, G Raw Star, Forever 21, Bugatti Shoes,
Lacoste and myntra dealing with private labels, accessories and brands as well, Flipkart
is able to capture a significant share of the market, estimated above 50%, with its own
platform selling local and regular brands.413

Apparels is one of the segments with huge profit margins and so Flipkart had been trying
to establish it in this segment, in which it did not succeed to a great extent. However,
merging with Myntra and Jabong, two leading players in this segment, has allowed
Flipkart to capture this market successfully. This combination means that there will be
lesser competition on price and hence the level of discounts offered to the customers
might get decreased. Basically this will lead to lesser choices and benefits for customers
and also lesser competition in this category, because a combined entity with lesser
pressure to compete won’t feel the need to pass on the benefits to its customers. Flipkart
has resorted to an acquisition strategy that will help it in gaining dominant position is
different segments or categories. So the focus of the companies that are combining
together is shifting from “mere growth to having a profitable growth”.414

However, such mergers might have some benefits also for the Indian online travel
booking platforms. For example the merger between Goibibo and Makemytrip has
changed the global perception about Indian travel booking platforms and brought in some

411
Mobis Philipose,Jabong may be Flipkart’s best investment yet, July 27,2016, retrieved from
http://www.livemint.com/Money/MpDsvuJOVdxOiskvMcrIkI/Jabong-may-be-Flipkarts-best-investment-
yet.html, last accessed on 21-05-2017
412
Ibid.
413
Myntra acquires Jabong from Global Fashion Group, The Hindu, July 26,2017, retrieved from
http://www.thehindu.com/business/Industry/Myntra-acquires-Jabong-from-Global-Fashion-
Group/article14509602.ece, last accessed on 21-05-2017
414
Pranbhanga Borpuzari, Flipkart acquires Myntra: Here is why it makes sense, Economic Times, May
22,2014, retrieved from http://economictimes.indiatimes.com/tech/internet/flipkart-acquires-myntra-here-
is-why-it-makes-sense/articleshow/35471764.cms, last accessed on 21-05-2017

75
confidence of the foreign companies operating in this segment.415 This might bring in
more innovations in this segment as well as increase options for the consumers.

Another important instance of acquisition that is still pending before CCI for approval is
that of eBay and Flipkart. An application for approval of acquisition of 100% share
capital of eBay India, by Flipkart was filed jointly by eBay and Flipkart in May 2017
which is under review by the Commission.416 All the parties are e-commerce marketplace
platforms. The parties had claimed two relevant markets, left to the final approval by
CCI, for the purpose of this acquisition:

(i) “Pan-India market for B2C sales comprising both organised and unorganised
segment.”417 or

(ii) “Pan-India market for B2C sales in the organised segment, including online and
offline channels”418

The Competition Act, 2002 clearly mentions that any combination which is likely to have
appreciable adverse effect on Competition shall be void. 419 The Commission, on finding
that the proposed combination is likely to have AAEC, shall not give it’s approve to
it.420In order to assess that whether such combination will cause any AAEC, the
commission first needs to demarcate the relevant market and then the market power. 421As
discussed in the previous chapter, the determination of relevant market for a particular
kind of company cannot be put into straight jacket formula. With the advent of new
technologies, the way people shop, book tickets, make payments, have been changing
constantly and have been posing new questions every day.422So, the Commission needs to

415
Supra note 181
416
Combination registration no C-2017/05/505
417
Summary in terms of Regulation 13 (1B) of the Competition Commission of India (Procedure in regard
to the Transaction of Business relating to Combinations) Regulations, 2011 (as amended) at Para D(a)
418
Ibid.
419
Supra note 29 atSec 6(1)
420
Supra note 29 atSec. 31(2)
421
Competition Commission of India, Implication of e-commerce on Competition, Fair Play, January 2016
at 6
422
Ibid.

76
look into the proposed mergers and acquisitions on case by case basis, as the analysis
requires considering not only the existing, but new parameters of development as well.423

There is a probability that certain combinations might result in increasing the market
share of combined entities, which is much larger than that of the other existing
competitors. The potential competition issues that such mergers and acquisitions might
pose are related to the abuse of dominance (predatory pricing, denial of market access,
imposing unfair conditions, etc.), if the combined entities gain a dominant position in the
relevant market. But for such allegations, a dominant position will need to be proved,
which will depend upon the relevant market. It is pertinent to mention here that due to a
large number of equally potential competitors present in the e-commerce market, it will
be really difficult for the commission to consider one of them as dominant in the relevant
market of online retail.424As discussed earlier, the Commission has recognised this fact in
Ashish Ahuja case, commenting that there are various competitors in the Indian e-
commerce market like eBay, FlipKart, Shopclues, Junglee, Amazon, Yebhi,rediff.com,
etc who are catering to the need to customers as well as to the sellers(by providing them a
platform to sell). So any one e-commerce player may not be considered as dominant
today.425

As a result of the combination between major players in particular segments,

(Makemytrip-Goibibo, Myntra-Jabong, proposed acquisition of Snapdeal by Flipkart),
the number of players in the market are decreasing. This might result in a lesser choice
for sellers to switch platforms. If a seller retailing his products through Flipkart does not
want to accept the policies of the marketplace, he/she won’t have an option to switch to
426
eBay or Snapdeal, as he did earlier. Any policies or clauses laid down by the seller,
whether fair or unfair, would have to be accepted by the seller. Price recommendations,
selective distribution agreements, exclusive dealing, etc are some of the examples of anti-

423
Ibid.
424
Supra note 45 at 21
425
Ibid.
426
Shelley Singh, Why eBay buyout & Flipkart's likely acquisition of Snapdeal are grim news for sellers,
Economic Times, MAY 02, 2017, retrieved from http://economictimes.indiatimes.com/small-
biz/startups/why-ebay-buyout-flipkarts-likely-acquisition-of-snapdeal-are-grim-news-for-
sellers/articleshow/58466055.cms, last accessed on 28-05-207

77
competitive practices that might be used by the combined entity in absence of any strong
competition of countervailing power.

Also, most of the combinations in e-commerce sector in India are being done in the same
segment. For example, Goibibo and Makemytrip were active in travel booking segment
and Myntra-Jabong in Fashion retail. Such combinations mean that the pressure to
compete is reduced and hence these players won’t be competing on prices anymore. As
mentioned earlier also, this might prove to be detrimental to the benefit of consumers
who are attracted towards online retail primarily because of the heavy discounts offered
by these players.

78
CHAPTER 4: CONCLUSION AND RECOMMENDATIONS

The use of e-commerce has become a part of life for today’s generation and has been
growing rapidly. As discussed earlier, there are various factors that have supported the
growth of e-commerce and this include increase in number of internet and smartphone
users, huge discounts and wide range of options, possibilities for customization of
products, cash on delivery options, digital wallets, mobile shopping apps(m-commerce)
and new delivery trends such as “try and buy” and next day delivery. But as discussed in
this dissertation, the e-commerce sector has also been raising certain important
competition concerns. The list of competition related concerns includes price
discrimination, predatory pricing, etc., which can cause appreciable adverse effects on the
competition.1

As discussed in Chapter1, in order to regulate the practices in this sector, FDI guidelines
were released by the government. The guidelines have had a major impact on the
corporate structure of the online players. Due to the fact that it does not permit FDI under
inventory based models whereas same is permitted upto 100% in marketplace models,
many retailers have shifted towards marketplace model of e-commerce.2 Flipkart,
Amazon, Jabong and many major e-commerce players have shifted towards marketplace
model, acting only as a platform and not as retailers to avoid any violation of FDI
guidelines. Also, it has been laid down that any e-commerce entity can carry out only
25% or less sales on its marketplace through a single seller or its group companies. The
marketplaces have also kept this in mind and limited their sales from one seller. 90% of
the sales of Jabong came from Xerion retail, which has now reduced its presence and
made way for emergence of 3 new sellers- Ravenna Fashion, Bren Trading and

1
Ashish patel,” Major Competition Law Issues in E-Tail Market”, 2 International Multidisciplinary
Research Journal, June 2015
2
Guidelines for FDI on e-commerce; Press note 3(2016), Para 2.1

79
Wearhouseproducts.3 Similarly Flipkart and Amazon have limited sales from their group
companies - WS Retail and Cloudtail respectively.4Myntra has a new seller- Tech
Connect Retail Pvt. Ltd, and Flipkart, has started working with four new sellers to meet
the norm.5In spite of this, the brick-and-mortar (offline) retailers assert that these online
retailers are still engaging themselves in retail activities and not just acting as
marketplaces, thereby contravening the existing regulations.6

As explained, the guidelines have clearly resulted in an increase in the number of

marketplaces, but there arises a major problem with respect to these marketplaces. Any
seller can be a part of such marketplaces by signing up on the platform and displaying its
products on such site, irrespective of the quality of the products it is offering. 7 In such
cases, selling of counterfeit, faulty or low quality products is likely to be very common.

With respect to foreign investment, the guidelines permit 100% FDI in the marketplace
model, whereas the same is not permitted in inventory based model of e-commerce.8
Inspite of enormous opportunities, the Indian e-commerce sector, in terms of the
inventory based model has failed to grow at par with its counterparts across the world. 9
This is primarily because of FDI in this sector in many other countries, which is currently
prohibited for Indian inventory based players. Although this prohibition has been made to

3
ShrutikaVerma, Jabong turning into marketplace as Snapdeal bid looms, July 21, 2016, retrieved from
http://www.livemint.com/Companies/ZIfsYyr5ar2kgghlGbG8YL/Jabong-shifts-to-marketplace-model-
ahead-of-potential-sale.html, last accessed on 13-05-2017
4
India: 100 % FDI In E-Commerce Marketplace – DIPP Defines The Rules, 23 May 2016, retrieved from
http://www.mondaq.com/india/x/493562/Inward+Foreign+Investment/100+FDI+In+E-
commerce+Marketplace+DIPP+Defines+The+Rules, last accessed on 15-05-2017
5
Mihir Dalal, Online retailers back with discounts despite FDI rules, 8 August 2016, retrieved from
http://www.livemint.com/Companies/yiq4ZtOuT9WLtmhi30dVtK/Discounts-are-back-at-e-commerce-
firms-despite-FDI-rule.html, last accessed on 17-02-2017
6
Rohitashwa Prasad, Gerald Manoharan, and Nidhi Sahay; “Topical Issues in the Regulation of E-
commerce in India”; Legal Services Newsletter; Winter 2016; retrieved from
http://www.usibc.com/sites/default/files/Files/blog/LegalServices_Newsletter.pdf
7
Anuj Srivas, Time to bid farewell to the Great E-Commerce Discount?, March 30,2016, retrieved from
https://thewire.in/26653/time-to-bid-farewell-to-the-great-e-commerce-discount/, last accessed on 14-05-
2017
8
Guidelines for FDI on e-commerce; Press note 3, 2016; Para 2.2, retrieved from
http://dipp.nic.in/English/acts_rules/Press_Notes/pn3_2016.pdf
9
Farhat Fatima , Flipkart-Myntra; From a Merger to an Acquisition, 4 International Journal of Management
and International Business Studies.,71, 82-83(2014)

80
provide a level playing field for large offline retailers, it is, in one way or the other,
hampering the growth of e-commerce in India.

Although the Government of India has released FDI guidelines for e-commerce, it is
pertinent to mention here that the Competition Commission of India has no jurisdiction
with regard to violations of the guidelines and the jurisdiction of CCI is limited to issues
relating to violation of the provisions of the Competition Act.

With regard to the competition law related concerns in this sector, the fundamental
question that needs to be answered is whether e-commerce forms a distinct relevant
market, or whether it forms a new retail channel within the same retail market.10

As discussed in Chapter 2, some of the decisions from the Indian competition authorities,
like Ashish Ahuja v. SnapDeal and ors,11 have considered e-commerce portals just as an
additional distributional channel for retail and not as a distinct market.12 Similarly, in
Deepak Verma v. Clues Network Pvt. Ltd. and ors, CCI maintained that “online and
offline market are two different channels of distribution and not two different relevant
markets”13 However, in Mohit Manglani case CCI commented that, “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".14 Instead of clearly marking the relevant market and then assessing the
dominance, CCI may have been trying to take an easy, but legally undesirable, path when
it mentioned “[w]hether we consider e-portal as separate relevant market or as a sub-
segment of market …”15

This has resulted in a lot of ambiguity regarding the position of CCI in this regard. As
one can imagine, implications of this approach, from the competition law perspective, are

10
Aleksandra Belousova, Relevant Market: the application to the E-commerce area in the EU, Thesis for
Aarhus School of Business, 2010 at 2
11
Case No. 17 of 2014, at para 16
12
Divye Sharma, India: Competition Law And E-Commerce: A Concern For The Future, 27 May,2015,
retrieved from http://www.mondaq.com/india/x/400368/Antitrust+Competition/Competition+Law+And+E-
commerce+A+Concern+For+The+Future, last accessed on 17-02-2017
13
Case 34 of 2016 at para 11
14
Supra note 12
15
Case No. 80 of 2015, Para 18

81
enormous. In this context, it is important to look at how other jurisdictions have
approached this issue. The EU has addressed some aspects of e-commerce in the Block
Exemption Regulation on Vertical Restraints 2790/1999.16

Most European courts have been of the opinion that online retail has certain specific
characteristics such as doorstep delivery, technology, access to internet, option to return
from home and reimbursement, etc. that distinguish it from other forms of retail.
Therefore, EU has maintained the position that online market should be regarded as a
separate relevant market.17 However in (Darty/FNAC Case, the European Court held that
the relevant market in context of the retail of a product (electronics in this case), will
include both online and offline stores.18 Therefore, both these channels were considered
to form a part of same relevant market.19

On the other hand, the US antitrust authorities are of the opinion that substitutes for
almost everything that is being sold online are available offline in the retail sector as well.
Due to this reason, they have been hesitant to accept online market as a separate relevant
market.

Another issue that pops up is whether a single brand’s product on the online channel
20
comprises a relevant market in itself. The CCI has negated this and maintained that a
specific product cannot be said to constitute a relevant market in itself.21 In Sonam
Sharma v. Apple Inc. and others22, the commission said that, “[r]elevant markets
generally cannot be limited to a single manufacturer’s products.”23 This observation of

16
European Union, The Vertical Restraint Block Exemption and Guidelines, 2010
17
Otto/ Grattan case(Case No. IV/M.070), Bertelsmann /Mondadori case(Case No IV/M.1407),
Bertelsmann/Havas / Bol(Case no. IV/M.1459)
18
Marta Giner, Acquisition of Darty by Fnac: the competition watchdog modernizes its view to define a
market by including in-store and online retail channels, January 2017, retrieved from
http://www.nortonrosefulbright.com/knowledge/publications/146230/acquisition-of-darty-by-fnac-the-
competition-watchdog-modernizes-its-view-to-define-a-market-by-including-in-, last accessed on 22-05-
2017
19
Transatlantic Antitrust and IPR Developments, Bimonthly Newsletter, Issue No. 3-4/2016 , Stanford –
Vienna Transatlantic Technology Law Forum, September 2016 at 11, retrieved from https://www-
cdn.law.stanford.edu/wp-content/uploads/2015/04/2016-3-4.pdf, last accessed on 23-05-2017
20
Supra note 15 at 5 (It was argued that the product in question, i.e. the novel “Half Girlfriend” would
constitute a relevant market in itself.)
21
Id. at para 18
22
Case No. 24/2011.
23
Sonam Sharma v. Apple Inc. and ors, para 46

82
commission is in consistence with the fact that the main purpose of relevant market is to
determine the products that may act as competitive restraint on the manufacturer and
hence it may not be correct to consider only a specific product available at an online
platform as a relevant market in itself.24

The decisions of CCI suggest that CCI is yet to take concrete positions on the issue of
relevant market in e-commerce sector. Also, none of the cases related to e-commerce
have gone past the preliminary phase, except for Jasper Infotech v. Kaff Appliances, in
which an investigation by DG has been directed. Although CCI has dealt with various
issues and allegations such as predatory pricing, exclusive agreements etc., we are yet to
see any orders that comprehensively address the competition law issues in e-commerce
sector.25 For bringing more clarity with regard to competition issues, it is important for
CCI to provide more concrete rationales for determining relevant market.26

There are no doubts about the fact that a number of substitutes are available for a product,
not only online but offline as well. So in order to demarcate a relevant market, it should
be kept in mind that a very narrow definition should not be taken, as it will not cover all
the substitutes that the competition authorities or courts should consider. But a very wide
definition may also go wrong at some places, as it may include products which may not
be considered as substitutes by consumers.

As far as various issues raised against the online players are concerned(like predatory
pricing and exclusive dealing agreements), till now the CCI has been of the opinion that
they are not likely to cause any appreciable adverse effect on the market, predominantly
owing to the small share of these online retailers in the total retail sector. Despite the
growth of e-commerce in past few years, the market share of e-commerce sector, as a part
of India’s total retail sector, is less than 1%.27 With such a substantially low market share,

24
Abir Roy, Competition Law in India: A Practical Guide, 2016, pg 39
25
Ibid.
26
Prashant Prakhar, Niyati Gandhi “Competition Law in India- Report on Jurisprudential Trends”; June
2015; retrieved from
http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/Competition_Law_in_India.
pdf,
Last accessed on 17-02-2017
27
Deepak Verma v. Clues Network Pvt. Ltd and ors, Case 34 of 2016 at para 11

83
it is nearly impossible to establish abusive practice by any online retailer. For example,
Deepak Verma v. Clues Network Pvt. Ltd. and ors, CCI can be seen observing that that
offline channel holds more than 99% share in retail market.28Buyers are not dependent on
online sellers and are free to buy offline.29 Therefore, it was held that none of the e-
commerce companies can be said to be holding a dominant position.30

A careful review of the position taken by CCI in different cases that have come up before
it makes one feel that CCI might have gone a bit too far in protecting the development of
e-commerce by giving such retailers a kind of blanket protection from section 4.

Some of the important competition law related concerns that have been posed by the
online players have been discussed in Chapter 3. For example, e-commerce has led to
increased transparency, due to which the prices and other details of the competitors can
be easily traced by any manufacturer, and this may facilitate collusion and price
maintenance. Free-riding is one of the main fears of retailers and to prevent it, the
manufacturers also resort to selective distribution or exclusivity agreements, which in
themselves pose certain competition law concerns. Another allegation that has surfaced
against e-tailers is regarding the heavy discounts and predatory pricing. But any such
allegation has not been proved till now due to the reason that establishing dominance of
any online player is a very difficult task. As discussed earlier, this depends primarily on
the way the relevant market has been demarcated. Also, if a player is dominant in e-
commerce, it does not necessarily means that the player is dominant in the whole retail
sector for that product or vice–versa. Resale price maintenance and Exclusive agreements
are some of the other potential issues in this sector. Many of these restrictions and
practices are likely to have AAEC in the Indian market in the same manner as it will have
in EU or any other jurisdiction. However, many of these issues are not yet litigated before
the competition authorities in India.

In this regard, it should be noted that e-commerce is a dynamic market that is

characterised by cycles of disruptive innovation. Although in the present scenario, none

28
Id. at 11
29
Id. at 15
30
Id. at 16

84
of the e-commerce players seem to be dominant, it cannot be guaranteed that this position
will continue for long in a dynamic market. So whether the current analysis of CCI in the
cases, that provides leverage to these companies in cases of practices that would have
been otherwise deemed anti-competitive, will hold true in the future or not will have to be
seen. Mergers and acquisitions in the sector are likely to raise assumptions of abuse of
dominance by a combined entity and assessing the market shares in such dynamic
markets will be a really difficult task.

Within a short time span of 14 years, i.e. from the time Indian competition law was
enacted (2002) to the time of e-commerce sector enquiry (2016), so many new issues
have popped up, and many more issues maypop up, considering the dynamic nature of
the market. It would be certainly helpful to formulate certain guidelines, which can guide
the competition authorities on issues relating to e-commerce. It may also provide some
guidance to the e-tailers, on what kind of activities might amount to anti-competitive
practices under Indian competition law.

The e-commerce sector enquiry conducted by European Commission is an example

worth exploring in this context. The preliminary report published by the commission may
act as a sort of warning for the online players and gives them an opportunity to recheck
their agreements, practices and contracts and bring them in consonance with antitrust
regulations, in order to avoid any future instigation of cases against them. The Indian
authorities may also initiate a similar enquiry so that precautionary measures can be taken
to curb the anti-competitive activities of online players.

As of now, it is quite clear that e-commerce market is here to stay. It has created open
opportunities for everyone across the globe. It has created new services and has also
brought down the cost of investing in brick mortar stores. The most favourable option
available to offline retailers is to participate in this development rather than complaining
and trying to fight it out. Many offline retailers have accepted this fact and have gone
online as well. For example, Croma, a retail chain by Tata, is now selling not only via its
physical stores, but also through their online store. Another way in which a bridge is
being built between online and offline market is O2O commerce revolution i.e. Online-

85
to-offline. It is a business strategy that links online world to offline-commerce.31 It makes
the customers aware about the wide range of options and deals and then ultimately the
drives them to purchase offline.32 Zomato, Urbanclap, Justdial, Dineout, Nearbuy, etc. are
O2O commerce platforms.33

Marketplaces also act to the benefit of small and medium retailers, as they help such
retailers to reach out to a larger consumer group, without having to invest heavily.
Retailers can sell on more than one platform and increase their reach and visibility.34

Currently, laws that regulate a firm’s activities in the offline world are attempted to be
applied in the same manner to firm’s activities in the online world.35But one thing that
needs to be kept in mind is that some of the characteristics of e-commerce sector are
different from those of offline retail.36 So whether the same set of existing laws will serve
the purpose or not, needs to be examined critically.

Finally, the competition authorities should also be careful in extending the precedents
relating to offline retail to e-commerce sector, as we need to acknowledge the fact that
even though the laws might not have changed, the markets have changed significantly.

31
Rahul Ranjan, Online to Offline-commerce(O2O)- The way ahead, Feb 19,2016, retrieved from
http://iimraipur.blogspot.in/2016/02/online-to-offline-commerce-o2o-way-ahead.html, last accessed on 30-
05-2017
32
Venkatesha Babu, Online to Offline: Rise of O2O Commerce, Business Today, April 24, 2016, retrieved
from http://www.businesstoday.in/magazine/cover-story/how-businesses-are-benefitting-from-the-online-
boom/story/230733.html , last accessed on 31-05-2017
33
Ibid.
34
Esha Shekhar, Are deep-discounts in e-commerce anti-competitive? Flipkart’s Big Billion Day Sale and
the way forward, October 17, 2014, retrieved from https://blog.ipleaders.in/are-deep-discounts-in-e-
commerce-anti-competitive-flipkarts-big-billion-day-sale-and-the-way-forward/, last accessed on 28-05-
2017
35
Electronic Marketplaces, EXECLSUM 378, December 2016
36
Ashish Ahuja v. Snapdeal, Case no 17 of 2014, Para 16

86
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