No case made out u/s 3 or 4 on ‘Sppin India’ due to low e-commerce market prominence: CCI

Case Details: Vaibhav Mishra. v. Sppin India (P.) Ltd. - [2022] 137 taxmann.com 325 (CCI)

Judiciary and Counsel Details

• • Ashok Kumar Gupta, Chairperson
  • Ms. Sangeeta Verma and Bhagwant Singh Bishnoi, Member

Facts of the Case

In the instant case, information was filed by Mr. Vaibhav Mishra (Informant’) under section 19(l)(a) of the Competition Act 2002 alleging contravention of provisions of sections 3 and 4 of the Act by Sppin India Pvt. Ltd (Shopee). The Informant was stated to be a consumer of e-commerce services provided by multiple entities in India. Shopee is stated to be an established player in Southeast Asia, facilitating third-party sellers to sell their goods on its online marketplace, which are available to consumers throughout India.

The Informant alleged that Shopee offers deep discounts on various products by selling them at an extremely low price on its online portal. This tactic of predatory pricing is being done with a view to affect traditional and small-scale businesses in India. Its modus operandi is stated to be similar to Amazon and Flipkart, and therefore, has an adverse effect on competition as per section 3 of the Act.

It was also alleged that Shopee was pricing the products in an unfair manner and exercises control over prices. Several discounts were allegedly offered by Shopee to private labels at the B2B level. Such deep discounting attracts huge base of customers, multitude of data on consumer preferences will be available to Shopee to use it to its advantage. Shopee, as per its privacy policy, may utilize the data to the disadvantage of the Indian economy.

With the entry of Shopee, small players would be pushed out of the market permanently. Thus, the Informant has prayed to the Commission that the tactics adopted by Shopee amounts to abuse of dominant position under section 4 of the Act and has an adverse effect on competition, which merits investigation.

CCI Held

The Commission noted that though the allegation is that Shopee is following similar discounting practices as allegedly done by Amazon and Flipkart, it does not appear to the Commission that Shopee possesses significant market power, much less dominance, at this stage, more so because of the fact that it is a new entrant in a market with established players. Further, the Informant has not pointed out the existence of any agreement in the Information for an examination under the provisions of section 3 of the Act.

Therefore, the Commission was of the opinion that there exists no prima facie case of contravention of the provisions of section 3 or 4 of the Act against Shopee, and therefore, the matter must be closed forthwith under section 26(2) of the Act.