Monthly Archives: October 2014

FPBAI Questions The Predatory Pricing Tactics Of E-Commerce Websites Of India

FPBAI Questions The Predatory Pricing Tactics Of E-Commerce Websites Of IndiaThe books publication industry of India is passing through a crucial and highly competitive phase. The growing popularity of e-books and sale of paper books at e-commerce websites have changed the way books were published, distributed and sold in India so far.

In the international market, regulations of and litigation in the field of books publication and e-books are fast increasing. For instance, Apple was fined in Beijing court for unauthorised e-books sale. Similarly, publishers entered into a settlement with European Union for e-books price fixation. The Penguin Group also settled an e-book price escalation lawsuit recently.

Back in India, the books distribution and wholesale channels have been severely hit by the burgeoning e-commerce business of India. While healthy competition is always welcome and is good or the consumers yet unreasonable and unethical business practices must be curbed at the very inception.

Unfortunately, Indian e-commerce websites are operating in an unregulated manner and they need to be suitably regulated as soon as possible. E-commerce websites in India are also engaging in violation of various Indian laws including taxation laws, foreign exchange laws, consumer laws and contractual laws. E-commerce websites in India are also engaging in predatory pricing thereby pushing the small business houses and businessmen out of business.

Books publishers in India have now decided to seek policy as well as legal intervention against the predatory pricing tactics of Indian e-commerce websites. The Federation of Publishers’ and Booksellers’ Associations in India (FPBAI) had recently written to Prime Minister Narendra Modi and the Ministries of Finance, Commerce, and Human Resource Development, complaining about the “questionable trade practices” adopted by e-commerce websites like Flipkart and Amazon. In fact, Myntra, Flipkart, Amazon, Uber, etc have already been questioned by the regulatory authorities of India for violating Indian laws.

S. Chand, a well-known publisher of text books, had also served a legal notice to Flipkart six months ago, accusing it of modifying discount structures, violating the clause, and retailing only their fast-selling titles. S. Chand has also snapped all ties with Flipkart and stopped providing its books to FlipKart since then. However, Flipkart continues to sell S. Chand’s books by sourcing them from wholesalers.

The FPBAI letter also seeks action to protect the publishing trade. E-commerce websites are purchasing books at lower discounts from publishers and distributors and sell the same at higher discounts, making a loss in each transaction. It is indeed a questionable activity as it smacks of the act of predatory pricing. In fact, bookstores such as Capital Book Depot in Chandigarh, Teksons and New Book Depot in Delhi have already shut their shops and many others are struggling for survival due to predatory pricing activities of e-commerce websites in India.

There is an urgent need on the part of Indian government to step in and come out with a dedicated e-commerce law of India to regulate the e-commerce activities in best possible manner. A techno legal framework is long due and Indian government has failed to provide the same so far.

India Should Regulate Taxation, Anti Competitive Practices And Predatory Pricing Of Indian And Foreign E-Commerce Websites

India Should Regulate Taxation, Anti Competitive Practices And Predatory Pricing Of Indian And Foreign E-Commerce WebsitesE-commerce in India has been in news for both good and bad reasons. It is really good to know that Indian e-commerce players have started making their own mark in the e-commerce sphere. However, it is equally alarming that e-commerce websites of India are not following the e-commerce laws of India. As a result e-commerce frauds in India have significantly increased and there is an urgent need to regulate and punish such e-commerce offences and crimes in India.

In fact, Myntra, Flipkart and many more e-commerce websites are under regulatory scanner of Enforcement Directorate (ED) of India for violating Indian laws and policies. ED has also raided two Bitcoins websites and their offices. ED believes that Bitcoins money can be used for hawala transactions and funding terror operations and this seems to be a legally plausible explanation as well.

E-commerce websites and technology companies are also under the scanner of taxation and regulatory authorities around the world. For instance, some believe that Amazon, Google and Starbucks are playing with the U.K. tax laws. Similarly, foreign companies and e-commerce portals would be required to register in India and comply with Indian laws. Indian government has also proposed establishment of Income Tax Overseas Units (ITOUs) of India in foreign countries to deal with evasion of taxes.

Transfer pricing issues have become a bone of contention for multi national corporations (MNCs) operating in India. Vodafone, Nokia and Shell have already received notices from income tax authorities of India regarding transfer pricing and other taxation issues. There are also great chances that the compulsory transfer pricing audit based on monetary threshold may be scrapped in India. Indian Tax Department has already received 232 applications from MNCs in 2013-14 for Advance Pricing Agreement.

However, if we analyse the trends in this regard, companies like Google, Facebook, Samsung etc may face more scrutiny from EU, U.S. and Indian regulators in the future. For instance, Google faced an anti trust suit for abusing its search results that was finally settled by it with the Federal Trade Commission (FTC) of United States. However, the antitrust probe initiated by the European Union (EU) is still pending a resolution.

A case has also been filed before the Competition Commission of India (CCI) against Google in for discriminatory trade practices related to its AdWords program. It has been alleged by the complainant that Google has abused its dominance by engaging in discriminatory and retaliatory practices relating to AdWords. A similar complaint was also filed by the Consumer Unity and Trust Society (CUTS) against Google before the CCI. The CCI also imposed a fine of Rs. 1 Crore upon Google for failure to supply information/ documents in the investigations. When Google planned to launch its Flight Travel Search Service in India, Indian stakeholders threatened to file a case before the CCI. Google App Vault may also raise regulatory issues if introduced in India without complying with the techno legal requirements.

Small and medium businesses and entrepreneurs of India are also facing the problem of predatory pricing undertaken by big e-commerce websites operating in India. With great financial resources, the e-commerce companies and websites offer products and services that cannot be offered in normal course of business. As a result, the small businesses cannot sell their products in the market and they are forced to quit the market. This now leaves only the big fishes to explore and monopolise the Indian market.

We at Perry4Law believe that there is an urgent need on the part of Indian government to look into this unfair practice commonly adopted by e-commerce websites in India. These practices are resulting in e-commerce frauds, violation of Indian laws and disturbing the balance of trade, commerce and business in Indian market. These unproductive, unprofessional, illegal and unethical activities cannot be allowed to operate in India anymore.