India orders investigation into alleged anti-competitive practices by Amazon and Walmart's Flipkart

India ordered a large-scale investigation into Flipkart and Amazon India on Monday after a retail trade group alleged that the e-commerce giants were indulging in anti-competitive practices to gain a foothold in the country.

Competition Commission of India (CCI), the local antitrust body, highlighted a wide gamut of issues, including the arrangements between smartphone vendors and e-commerce platforms to sell certain handsets exclusively online, and e-commerce firms apparently giving preferential treatment to certain sellers, and said these allegations merit an investigation.

The CCI also ordered the director general to investigate whether Amazon India and Walmart are offering deep discounts on their marketplaces and promoting their own private labels.

"The informant alleged that Flipkart and Amazon have established an inherently anti-competitive model for e-commerce," the CCI said.

A Flipkart spokesperson told TechCrunch that the company was reviewing the document.

“The Flipkart group is fully compliant with all applicable laws and FDI regulations. We take pride in democratising e-commerce in India and giving market access to lakhs of MSMEs, sellers, artisans and small businesses, making quality and affordable goods available to consumers through our transparent and efficient marketplace while creating lakhs of jobs,” the spokesperson added.

"We welcome the opportunity to address allegations made about Amazon; we are confident in our compliance, and will cooperate fully with CCI," an Amazon spokesperson told TechCrunch.

Delhi Vyapar Mahasangh, a group that represents micro and small-sized businesses, brought the matter to the CCI.

The decision to investigate Amazon India and Flipkart would add to the headache of both the e-commerce firms that faced a major regulatory hurdle in the country last year. Amazon has invested north of $5 billion in its India business, while Walmart acquired a majority stake in Flipkart for $16 billion in 2018. Both the companies count India as one of their most important overseas markets.

The direction also comes days before Amazon chief executive Jeff Bezos is expected to kickstart an event focused on small businesses in New Delhi on Wednesday.

An investigation into the alleged anti-competitive practices by Amazon and Flipkart is the "first concrete long-awaited step" in recognizing the disadvantages small traders face today, said Praveen Khandelwal, secretary general of Confederation of All India Traders -- a body that represents 70 million traders and 40,000 trade associations in India.

The director general has been ordered to complete the investigation and submit the report within a period of 60 days.