Tech This Week | The necessity for anti-trust reform
Earlier this month, the Competition Commission of India dismissed an anti-trust case against Amazon. Here's some context. The Dutch apparel company Beverly Hills Polo Club (BHPC) approached CCI, claiming that Amazon have been indulging in anti-competitive practices. That they had plenty of allegations, and strong evidence to support their claim. Let me go through them individually.
1. BHPC claimed that they do not sell on Amazon and count on their own website (and Tata Cliq) for selling their products. However, Amazon offers similar products at a deeply discounted rate which makes it unviable for BHPC to contend with the prices being offered. Sacrificing profit for market share has long been Amazon’s method of business and its own deep pockets give it the financial muscle to achieve that.
2. On a related note, BHPC claimed that Amazon had been guilty of selling counterfeit products on its platform. The report also alleged that the ordinary consumer cannot differentiate between the counterfeit product sold by Amazon and the authentic/genuine products which are available alone website. And unless you are a truly hardcore BHPC fan (that i imagine could possibly be a rare breed), you trust Amazon more and wrap up shopping there.
3. BHPC also made the argument that Amazon had data from consumers and the sellers that enabled it to raised map trends and utilize them to its own advantage. In addition, Amazon’s own brand, ‘Symbol’ had less price, higher rankings, and better reviews compared to its competition, raising questions about platform neutrality.
4. BHPC also talks about the relationship between Amazon, Cloudtail (which is a favored seller on Amazon) and partner brands. BHPC claims that brands selling through Cloudtail have advantages regarding subsidies, ratings, and deliveries. This creates an exclusionary effect for brands who didn't sell through Cloudtail, so that it is hard to allow them to compete.
Assuming you have not browse the report, I urge that you do it when you can. It is an excellent look into the challenges sellers face on platforms like Flipkart and Amazon and why these complaints arise so often around the world. In fact, during the anti-trust hearing earlier this year, Jeff Bezos was asked about many of these. For instance, at one point in the hearing, he was questioned on whether Amazon had used data from sellers to create business decisions. He responded by saying that Amazon did have an insurance plan on not doing that, but he cannot guarantee that the policy was not violated.
That response fits in neatly with what regulations must say about dominance in India at least. According to Indian law, dominance itself isn't a problem. However, the abuse of dominance is. Which is precisely what using seller data from the platform to make business decisions might have been classified as.
This brings me to the consequence of the case. The CCI ruled towards Amazon, and there are two explanations why this happened, and is likely going to be a trend. First, to prove dominance, an informant like BHPC must define a relevant market. In this instance, they defined the marketplace as ‘online fashion retail in India’. Secondly, the informant must prove that the business is dominant available in the market involved, and that the dominance has been abused. There are always a couple of issues with this. Amazon’s market, unlike, say WhatsApp Pay is hard to define. The platform famously sells everything, from books to computers, to clothes, to plants. There is no-one market it neatly fits in. In this case, the marketplace was defined as ‘online fashion retail in India’, but that won't apply in a case that talks about books instead. One could go an even higher and claim that Amazon’s main market is e-commerce platforms.
In either of those definitions, it is hard to prove that Amazon is dominant. In case of BHPC the CCI ruled that Amazon had not been dominant since multiple players were also competing on the market and Amazon didn't have a dominant share. And whatever Amazon’s practices were, consumers (and sellers) each had selection of platform.
I believe this case can be utilised as a template to create sense of similar cases going forward, and in addition serve as grounds for why our knowledge of the space (and the law) must evolve. This consists of accounting for the lock-in ramifications of Amazon Prime (or whatever similar service offered by Tata Cliq or Flipkart, if any) and the parameters by which dominance and markets are defined.
