Written by Aditya Kalra
NEW DELHI (Reuters) – Samsung, Xiaomi and other smartphone makers colluded with Amazon.com Inc and Walmart Inc’s Flipkart to launch products exclusively on the e-commerce companies’ Indian websites in violation of antitrust laws, according to regulatory filings seen by Reuters.
Reuters reported this week that antitrust investigations by the Competition Commission of India found that Amazon and Flipkart violated local competition laws by favoring certain sellers, prioritizing certain listings and drastically underpricing products, to the detriment of other companies.
The CCI’s 1,027-page report on Amazon also said the Indian units of five companies — Samsung, Xiaomi, Motorola (NYSE:), Realme and OnePlus — were “engaged in the practice of launching exclusive phones” “in collusion” with Amazon and its affiliates, violating competition law.
In the case of Flipkart, the 1,696-page CCI report said the Indian units of Samsung, Xiaomi, Motorola, Vivo, Lenovo and Realme engaged in similar practices.
Including smartphone makers like Samsung and Xiaomi in the case could add to their legal and compliance headaches.
“Exclusivity in business is anathema. It is not only incompatible with free and fair competition but also in the interest of consumers,” wrote GV Siva Prasad, additional director general of the Competition Commission of India, in the Amazon and Flipkart reports, citing identical findings.
Reuters first reported that smartphone companies were accused of anti-competitive behaviour in the CCI reports, which were released on August 9 and have not been made public.
Xiaomi declined to comment, while other smartphone makers did not respond to requests for comment.
Amazon, Flipkart and the Competition Commission of India have not yet responded to the reports.
The CCI report said that during investigations, Amazon and Flipkart “deliberately downplayed” claims of exclusive launches, but officials found the practice was “rampant.”
Data from Counterpoint Research shows that South Korea’s Samsung and China’s Xiaomi are the two largest smartphone companies in India, together controlling nearly 36% of the market share, while China’s Vivo controls 19%.
India’s e-retail market is expected to exceed $160 billion by 2028, up from $57-60 billion in 2023, according to estimates by consulting firm Bain.
The findings of the investigation are a major setback for Amazon and Flipkart in a key growth market where they have faced the wrath of small retailers for years for hurting their offline businesses.
The Indian Chamber of Commerce added that the two companies used their foreign investments to provide subsidized rates for services such as warehousing and marketing to a select number of sellers.
Online sales boom
The Competition Commission of India has ordered some smartphone companies — Xiaomi, Samsung, OnePlus, Realme and Motorola — to submit their financial statements for three financial years up to 2024, certified by their auditors, to the CCI, according to an internal CCI document dated Aug. 28, also seen by Reuters.
The investigation into Amazon, Flipkart and their sellers was launched in 2020 after a complaint from an affiliate of the country’s largest retail trade association, the All India Traders Federation, which has 80 million members.
The Competition Commission of India will review any objections to its findings from Amazon, Flipkart, retailers’ associations and smartphone companies in the coming weeks, and could impose fines as well as require the companies to change their business practices, people familiar with the matter said.
Indian retailers have repeatedly accused Amazon, Flipkart and smartphone companies of launching phones exclusively online, saying store owners suffered because they did not get the latest models and customers were searching for them on shopping sites.
“The exclusive launches not only severely impacted regular sellers on the platform, but also traditional retailers who were supplied with the phones much later,” the CCI report said, citing analysis of data from smartphone companies.
Indian research firm Datum Intelligence estimates that 50% of phone sales were online last year, up from 14.5% in 2013. Flipkart will account for 55% of online phone sales in 2023, and Amazon 35%.