What if Amazon takes over Flipkart? India's antitrust watchdog starts study

India’s e-commerce industry is still small compared with those in the US or China but it is expected to grow quickly as more consumers get online
India’s antitrust watchdog is assessing the domestic e-commerce sector, a step that could have consequences for Amazon.com Inc. and Walmart Inc.’s Flipkart, which dominate online sales in the country.

In a questionnaire dated May 17, the Competition Commission of India says it is seeking to understand the evolution of the e-commerce industry, the sector’s methods and strategies, business practices and “implications for competition,” according to a copy reviewed by The Wall Street Journal. Ernst & Young is conducting the study, according to the 14-page document, which is marked confidential.

The questions cover the percentage of products sold by categories, inventory practices, how pricing decisions are made and total sales volume, among other subjects.

A spokesman for the Competition Commission of India didn’t respond to a request for comment about the questionnaire Tuesday. Representatives in India for Ernst & Young, Amazon and Flipkart also didn’t immediately respond to requests for comment.

Hoping to emulate China’s success at promoting homegrown technology companies, Indian policy makers have been discussing in recent months ways to restrict US players in what many consider the world’s biggest untapped tech market.

“They’re picking up from global trends, discussions about how online marketplaces dominate sales,” said Satish Meena, an e-commerce analyst at research firm Forrester.

Last year, New Delhi established a clearer set of rules for e-commerce that forced Amazon and Flipkart to adjust their operations. Also, the country’s telecommunications regulator has considered new policies that could force Facebook Inc.’s WhatsApp and other social-media platforms to permit authorities to read encrypted messages between users on national-security grounds.

Flipkart, which Walmart acquired for $16 billion last year, has a roughly 38% market share in India, according to Forrester. Amazon, which is investing $5 billion to expand its operations here, has about 31% of the market, the research firm said.

India’s e-commerce industry is still small compared with those in the US or China but it is expected to grow quickly as more consumers get online, thanks to inexpensive mobile data and smartphones. India’s online-retail market was valued at $26.9 billion in 2018, but should rise to $84.6 billion in 2023, according to Forrester.

It couldn’t be determined which e-commerce companies have received the antitrust watchdog’s questionnaire. A disclaimer in the document says that it is “purely a fact-finding exercise to develop a clear understanding of the function of e-commerce in India.”

The Competition Commission has also been investigating whether Alphabet Inc.’s Google used the dominant position of its Android operating system to block rivals in India, according to an official with knowledge of the matter. Google has said Android has led to “more competition and innovation, not less.”

Last year, the Ministry of Corporate Affairs assembled a panel to review the country’s competition rules “in view of changing business environment and bring necessary changes, if required,” the agency said at the time.
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Source: The Wall Street Journal