A group of brick and mortar retailers in Bangalore have got together and filed a complaint with the Competition Commission of India claiming that online retailers are engaging in a predatory pricing abuse. The complaint has been filed against multiple e-retailers. I assume that the complainant alleges an abuse of a collective dominant position on the part of the e-retailers. The concept of collective dominance has not been legislated under Section 4 of the Competition Act, 2002 as yet. Secondly, as per a study by Technopak, the market shares of various retailers in India are as follows:
- Brick & Mortar Stores – 93% approx.
- Corporatised Brick & Mortar Retail Centers – 7% approx.
- E-tailing – 0.2 % approx.
Considering the extremely small market share, no individual online retailer or even collectively can be held to be in a dominant position. I don’t think that the Commission would even form a prima facie opinion (considering the market share) and order an inquiry into the said complaint. Predatory pricing is an abuse only if the same is engaged in by a dominant undertaking. The brick & mortar retailers are probably feeling the pinch as online retailers have lower overheads and are able to sell products at a lesser price. This is in fact beneficial for the Indian consumer as it is getting an opportunity to buy products cheaply. I reiterate that the purpose of competition laws is consumer welfare through economic efficiency and not protection of inefficient competitors.
The association of retailers who have filed the said complaint have also started a website called http://www.wewillact.com. The website claims that it has more than 1000 retailers associated with it. Furthermore, on one of the pages of the website i found the following mentioned:
“We will not purchase or supply anything to these unethical online retailers. ( XKart, Ydeal, KBong..) Lets boycott them. “
“Take some action against these unethical online retailers:
These aforesaid statements may amount to a decision taken by an association of enterprises and considering that the association is explicitly asking its members to limit or control supply, it may amount to a violation of Section 3 of the Competition Act, 2002. Such boycott is against the interests of the consumers of this country. If the Competition Commission of India or online retailers are reading this, kindly take a note of the same and have a look at the associations website.