Amazon and Walmart-owned Flipkart, two of the largest eCommerce platforms in India, are reportedly facing allegations of violating the country’s antitrust regulations. According to reports from the Competition Commission of India (CCI), an investigation has revealed that both companies engaged in anti-competitive practices by favoring select sellers on their platforms.
The investigation, initiated by the CCI in 2020, aimed to determine whether Amazon and Flipkart were giving preferential treatment to specific merchants with whom they had business ties, as well as whether certain product listings were prioritized over others on their websites.
Two reports by the CCI, found that both companies created systems where favored sellers were given higher rankings in search results, thereby disadvantaging competitors. The investigation concluded that these practices violated India’s competition rules.
“Each of the anti-competitive practices alleged … were investigated and found to be true,” stated the CCI reports, which have not been made public but were obtained exclusively by Reuters. The reports further noted that “ordinary sellers remained as mere database entries,” indicating that smaller vendors were effectively sidelined by the platforms’ algorithms.
PYMNTS reached out to Amazon and Flipkart for comments regarding the allegations, but neither company had responded at the time of publication.
Strategic Importance of the Indian Market
The investigation comes as both Amazon and Walmart are aggressively expanding their operations in India, the world’s most populous nation, in an effort to boost revenues. India has become a key market for both companies as they seek to capture a larger share of the country’s rapidly growing eCommerce sector.
In June 2023, Amazon announced plans to invest $26 billion in India by 2030. While the company did not provide a detailed breakdown of the investment, it previously revealed that $12.9 billion of the total would go into its cloud computing division, Amazon Web Services, while $6.5 billion would be allocated to its Indian eCommerce operations.
Walmart, which acquired Flipkart in 2018, has also placed significant bets on the Indian market. The retail giant is leveraging its investments in Flipkart and PhonePe, a prominent Indian payments provider, to meet its goal of doubling its overseas gross merchandise volume to $200 billion by 2028.
“It is not crazy to think that both those businesses could be $100 billion businesses in the future,” said Walmart Chief Financial Officer John David Rainey during a conference last year.
Intensifying Competition in the Grocery Sector
The rivalry between Amazon and Walmart has also intensified in the grocery sector, where Walmart currently holds a significant lead. According to a recent report by PYMNTS, Amazon is making strategic moves to close the gap, particularly in third-party grocery delivery services.
Amazon recently announced two key partnerships aimed at strengthening its position in the grocery market. One is a new collaboration with Seattle-based Metropolitan Market, and the other is an expanded partnership with East Coast grocery chain Weis Markets. These initiatives are part of Amazon’s broader strategy to expand its footprint in the grocery sector, a retail category where it lags behind Walmart by a considerable margin.
Research cited by PYMNTS shows that Walmart’s share of consumer grocery spending is seven times larger than Amazon’s, making it a critical battleground for the eCommerce giants.
As Amazon and Flipkart face growing scrutiny from Indian regulators, their efforts to dominate the nation’s eCommerce and retail landscape will likely continue to shape the future of competition in one of the world’s most dynamic markets.