The steep discounts offered by online retailers in India will be probed. Conventional retailers who compete with e-tailers are strongly opposed to the discounts being offered by online sellers arguing that it is aimed at displacing brick-and-mortar retailers and will eventually affect consumer interest. They say, e-commerce companies have an undue advantage as they are allowed to access foreign direct investment through which they can provide deep discounts that traditional retailers cannot match.
A 10-member panel will examine the trends in the digital economy and whether e-tailers are subject to any restrictions in their access to dealerships from manufacturers. Practices in the digital economy, backlog of competition cases to be resolved and the fee structure followed by the Competition Commission of India will be reviewed by the panel.
Industry practices, such as manufacturers imposing certain restrictions on online sellers in order to protect a large number of conventional dealers, who also compete among themselves, have been a subject of dispute. In cases where certain brands face intense competition from rival brands, restrictions imposed by a producer on online dealers to protect its conventional dealers may not be seen by the competition watchdog as anti-competitive. This, however, enables producers to control the retail price and may not be in the interest of consumers.