Walmart-owned Indian e-commerce company Flipkart said its practice of offering reduced charges for some sellers does not break any laws. The company said it sees nothing wrong with providing the incentive to sellers on its website that agree to lower their product's prices.
Flipkart is currently embroiled in a legal battle against the Competition Commission of India, which has restarted an investigation into the e-commerce company's business practices. Last month, a judge had dismissed the company's appeal.
Local retailers in the country have filed complaints against Flipkart for its business practices, which some had claimed was in violation of the nation's foreign investment laws. Through its favoring of some sellers, Flipkart is actively influencing product prices, Indian retailers had alleged.
Flipkart's counsel Harish Salve told judges at a court hearing in the southern state of Karnataka Tuesday that he sees nothing wrong with how the company is conducting its business. He specifically referred to the recent sale conducted by Flipkart during the Hindu festival of Diwali.
"I tell my sellers at a time like Diwali if you reduce your prices, I will give you a reduction in rent. What's wrong?" he said.
The comments made during the hearing immediately drew criticism for local retail groups, who had called on the increased scrutiny of the company's business practices. The Confederation of All India Traders said Flipkart's business practices were violating the nation's foreign direct investment rules.
The group said federal direct investment rules prohibit marketplaces from directly influencing prices. A section of the law governing the operations of the e-commerce companies says that "entities providing (a) marketplace will not directly or indirectly influence the sale price of goods or services."
Apart from Flipkart, Amazon is also facing a regulatory investigation into its similar business practice. According to sources citing internal Amazon documents, the company has for years given preferential treatment to a group of sellers. Amazon reportedly gives those sellers discounted fees to allow them to offer their products at more competitive prices.
Amazon has denied the allegations and said that it "does not give preferential treatment to any seller" and that prices on its marketplace are solely dictated by sellers.
