Samsung and Xiaomi colluded with Amazon and Flipkart to manipulate the market: Indian government watchdog
According to regulatory reports from the Competition Commission of India (CCI), Samsung, Xiaomi and other smartphone companies colluded with Amazon and Flipkart to launch their products exclusively on their websites, violating anti-competition laws.
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Samsung, Xiaomi and other smartphone companies violated antitrust laws by colluding with Amazon and Walmart to block Flipkart opens new tab to launch products exclusively on the e-commerce firms’ Indian websites, according to regulatory reports seen by Reuters.
An antitrust investigation by the Competition Commission of India (CCI) has found that Amazon and Flipkart violated local competition laws by giving preference to select sellers, prioritising certain listings and offering deep discounts on products to the detriment of other companies, Reuters reported last week.
The CCI’s 1,027-page report on Amazon also said that the Indian units of five companies – Samsung, Xiaomi, Motorola, Realme and OnePlus – were involved in colluding with Amazon and its affiliates to launch exclusive phones, violating competition laws.
In the case of Flipkart, the 1,696-page CCI report said the Indian units of Samsung, Xiaomi, Motorola, Vivo, Lenovo and Realme also adopted similar practices.
Involving smartphone makers like Samsung and Xiaomi in this case could increase their legal and compliance troubles.
“Exclusivity in trade is anathema. It is not only against free and fair competition but also against the interests of consumers,” CCI Additional Director General G.V. Siva Prasad wrote in a report on Amazon and Flipkart with similar findings.
Reuters first reported that smartphone companies have been accused of anti-competitive behaviour in the CCI report, which is dated August 9 and is not public.
Xiaomi (1810.HK) declined to comment, while other smartphone makers did not respond to requests for comment.
Amazon (AMZN.O), Flipkart and the CCI did not respond, and have not yet commented on the report’s findings.
Both CCI reports said that during the investigation Amazon and Flipkart had “deliberately downplayed” the exclusive launch charges, but officials found the practice was “widespread”.
Data from Counterpoint Research shows that South Korea’s Samsung and China’s Xiaomi are the two biggest smartphone companies in India, with a combined market share of about 36%, while China’s Vivo has a 19% share.
Consultancy firm Bain estimates that India’s e-retail market will grow to over $160 billion by 2028, up from $57-60 billion in 2023.
The investigation findings are a major setback for Amazon and Flipkart in a key growing market where they have for years faced the ire of smaller retailers for hurting their offline businesses.
CCI has also said that the two companies used their foreign investments to provide concessional rates for services such as storage and marketing to select vendors.
Online sales boom
According to an internal CCI document dated August 28, also seen by Reuters, some smartphone companies – Xiaomi, Samsung, OnePlus, Realme and Motorola – have been ordered to submit their financial statements for three financial years up to 2024, certified by their auditors, to the CCI.
The investigation against Amazon, Flipkart and their sellers was launched in 2020 following a complaint by an affiliate of the country’s largest retailer association, the Confederation of All India Traders, which has 80 million members.
The CCI will review any objections to its findings from Amazon, Flipkart, the retailers association and smartphone companies in the coming weeks, and could potentially impose fines as well as force the companies to change their business practices, people familiar with the matter said.
Indian retailers have repeatedly accused Amazon and Flipkart and smartphone companies of launching phones exclusively online, saying shoppers suffer losses as they do not get the latest models and customers look for them on shopping websites.
“Exclusive launches have adversely impacted not only the regular sellers on the platform but also retailers who were made available the mobile phones much later,” both the CCI reports said, citing analysis of data from smartphone companies.
Indian research firm Datum Intelligence estimates that 50% of phone sales were made online last year, up from 14.5% in 2013. Flipkart will account for 55% of online phone sales in 2023, and Amazon 35%.
