India to Survey E-Commerce Firms -- WSJ
May 22 2019 - 3:02AM
Dow Jones News
Antitrust watchdog's assessment could have implications for
Amazon and Walmart
By Newley Purnell and Rajesh Roy
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (May 22, 2019).
NEW DELHI -- India's antitrust watchdog is assessing the
domestic e-commerce sector, a step that could have consequences for
Amazon.com Inc. and Walmart Inc.'s Flipkart, which dominate online
sales in the country.
In a questionnaire dated May 17, the Competition Commission of
India says it is seeking to understand the evolution of the
e-commerce industry, the sector's methods and strategies, business
practices and "implications for competition," according to a copy
reviewed by The Wall Street Journal. Ernst & Young is
conducting the study, according to the 14-page document, which is
marked confidential.
The questions cover the percentage of products sold by
categories, inventory practices, how pricing decisions are made and
total sales volume, among other subjects.
"What if tomorrow Amazon takes over Walmart-controlled Flipkart
or vice versa? Wouldn't there be a complete monopoly? This needs to
be checked," said an official at India's Ministry of Corporate
Affairs who declined to be named. The ministry oversees the
Competition Commission.
A spokesman for the Competition Commission of India didn't
respond to a request for comment about the questionnaire Tuesday.
Representatives in India for Ernst & Young, Amazon and Flipkart
also didn't immediately respond to requests for comment.
Hoping to emulate China's success at promoting homegrown
technology companies, Indian policy makers have been discussing in
recent months ways to restrict U.S. players in what many consider
the world's biggest untapped tech market.
"They're picking up from global trends, discussions about how
online marketplaces dominate sales," said Satish Meena, an
e-commerce analyst at research firm Forrester.
Last year, New Delhi established a clearer set of rules for
e-commerce that forced Amazon and Flipkart to adjust their
operations. Also, the country's telecommunications regulator has
considered new policies that could force Facebook Inc.'s WhatsApp
and other social-media platforms to permit authorities to read
encrypted messages between users on national-security grounds.
Flipkart, which Walmart acquired for $16 billion last year, has
a roughly 38% market share in India, according to Forrester.
Amazon, which is investing $5 billion to expand its operations
here, has about 31% of the market, the research firm said.
India's e-commerce industry is still small compared with those
in the U.S. or China but it is expected to grow quickly as more
consumers get online, thanks to inexpensive mobile data and
smartphones. India's online-retail market was valued at $26.9
billion in 2018, but should rise to $84.6 billion in 2023,
according to Forrester.
It couldn't be determined which e-commerce companies have
received the antitrust watchdog's questionnaire. A disclaimer in
the document says that it is "purely a fact-finding exercise to
develop a clear understanding of the function of e-commerce in
India."
The Competition Commission has also been investigating whether
Alphabet Inc.'s Google used the dominant position of its Android
operating system to block rivals in India, according to an official
with knowledge of the matter. Google has said Android has led to
"more competition and innovation, not less."
Last year, the Ministry of Corporate Affairs assembled a panel
to review the country's competition rules "in view of changing
business environment and bring necessary changes, if required," the
agency said at the time.
Write to Newley Purnell at newley.purnell@wsj.com and Rajesh Roy
at rajesh.roy@wsj.com
(END) Dow Jones Newswires
May 22, 2019 02:47 ET (06:47 GMT)
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