Smartphone companies have violated competition laws by giving preference to select sellers, prioritizing listings and offering deep discounts.

Samsung, Xiaomi and other smartphone makers have been accused of conspiring with Amazon and Walmart Inc’s Flipkart to launch products exclusively on the e-commerce giants’ Indian websites in violation of antitrust laws, according to regulatory filings obtained by Reuters.

The Competition Commission of India (CCI) has conducted investigations that revealed that Amazon and Flipkart violated the country’s competition laws by favoring certain sellers, prioritizing specific listings and offering deep discounts on products, hurting other competitors in the market.

The CCI’s 1,027-page report on Amazon found that the Indian units of five manufacturers — Samsung, Xiaomi, Motorola, Realme and OnePlus — were involved in “exclusive launches” of smartphones, acting in “collusion” with Amazon and its affiliates, which constitutes a violation of competition laws.

Workers stage a protest to demand higher wages and recognition of their union, at Samsung India’s Sriperumbudur factory, near Chennai, September 11, 2024. Samsung Electronics workers in southern India went on strike on September 9 to demand better pay and working hours, with the consumer technology giant promising the industrial action would not affect consumers. / Photo: AFP

In Flipkart’s case, the 1,696-page report mentioned that Indian units of Samsung, Xiaomi, Motorola, Vivo, Lenovo and Realme carried out similar practices.

The inclusion of these major smartphone makers like Samsung and Xiaomi in the case could add to their legal and compliance woes. “Exclusivity in business is anathema. It is against fair competition and also against the interests of consumers,” wrote GV Siva Prasad, deputy director general of the CCI, in the Amazon and Flipkart reports, highlighting the harm caused.

The CCI reports, dated August 9, have not been made public. Xiaomi declined to comment, and the other smartphone makers did not respond to requests for comment. Amazon, Flipkart and the CCI have also not commented on the findings of the reports so far.

Investigations revealed that Amazon and Flipkart “deliberately downplayed” allegations of exclusive launches during the probes, but the CCI found that the practice was “rampant”.

Data from Counterpoint Research shows that South Korea’s Samsung and China’s Xiaomi are the leaders in India’s smartphone market, with a combined market share of nearly 36%, followed by China’s Vivo at 19%.

India’s e-commerce market, currently valued at $57-60 billion, could surpass $160 billion by 2028, according to estimates by Bain & Company. The CCI findings are a major setback for Amazon and Flipkart, which are facing opposition from small Indian retailers who accuse the platforms of undermining their offline businesses.

The CCI also accused both companies of using foreign investments to subsidize warehousing and marketing services for selected vendors.

Workers move products for sale at Flipkart Malur Warehouse in Karnataka, on the outskirts of Bengaluru, India, September 10, 2024. Walmart-owned Indian e-commerce company Flipkart is accused by India’s competition commission of conspiring with smartphone companies Samsung, Xiaomi, Motorola, Vivo, Lenovo and Realme to violate antitrust laws / EPA / EFE

Some smartphone makers — Xiaomi, Samsung, OnePlus, Realme and Motorola — have been required to submit their audited financial statements for the last three fiscal years up to 2024 to the CCI, according to an internal document dated August 28.

The investigation into Amazon, Flipkart and their sellers was launched in 2020 following a complaint from the Confederation of All India Traders, the country’s largest association of retailers with 80 million members.

In the coming weeks, the CCI will review objections from Amazon, Flipkart, the retailers’ association and smartphone makers. Depending on the final findings, fines could be imposed and the companies may be required to change their business practices.

Indian retailers have repeatedly accused e-commerce giants and smartphone makers of exclusive online product launches, saying such practices hurt traditional retailers who receive new smartphone models long after they are available online.

“Exclusive launches not only hurt online sellers but also brick-and-mortar retailers, who received the models much later,” the CCI reports said, based on data from smartphone companies.

Source: https://www.ocafezinho.com/2024/09/14/india-acusa-samsung-e-xiaomi-de-conluio-com-amazon-e-flipkart/

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