The government is probing Walmart-owned Flipkart and Amazon over the alleged predatory pricing, commerce minister Piyush Goyal said on Thursday.
Warning of stringent action according to the law for any violation, he said detailed questionnaires have been sent to the companies and their responses are awaited.
According to media reports, the e-commerce majors have grossed up over $3 billion in gross merchandise value during the festive sales held over the past fortnight, which typically see over half of their annual sales.
“E-commerce companies have no right to offer discounts or adopt predatory prices. Selling products cheaper and causing the retail sector to incur losses is not allowed,” Goyal told reporters in Mumbai.
They are also not permitted to own products and sell them, he said, maintaining that they are only platforms helping sellers connect with potential buyers.
Without specifying the exact transgressions, Goyal said his ministry had received complaints from the traders' body, CAIT, alleging violations of norms by these players.
“A detailed questionnaire has been sent to them. Today or tomorrow, a supplementary questionnaire will also be sent,” he said. He had earlier warned the e-commerce players, the minister said.
“We will take stringent action against them, if there is violation of any law in letter or in spirit. The law is clear. Action will be taken as per the law,” he said.
CAIT had in a letter on Monday urged Goyal to order an audit into the business model of all e-commerce firms and the foreign-owned Amazon and Flipkart in particular.
In the letter, CAIT also said since Amazon and Flipkart claim that individual brands were offering discounts, the government should convene a meeting with major brands to ascertain the truth.
“The business model of Amazon and Flipkart should be audited by the government to arrive at the real conclusion,” it said in the letter.
Following the complaint from the traders’ body, senior officials of the department for the promotion of industry and internal trade had met Amazon and Flipkart representatives last week.
