CCI Accuses Samsung, Xiaomi Of Breaching Antitrust Laws; Orders Financial Data Of Last Three Fiscal Years
The two reports by CCI accused Samsung, Xiaomi, Motorola, Realme, OnePlus, Vivo and Lenovo of violating antitrust laws
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As per recent media reports, Samsung, Xiaomi, Vivo, OnePlus and other smartphone companies are being accused of colluding with Amazon and Flipkart to launch products exclusively on the e-commerce firms' Indian websites, breaching antitrust laws.
The Competition Commission of India (CCI), the entity behind the antitrust investigations revealed that e-commerce giants Amazon and Flipkart violated local competition laws by prioritising select sellers and their products resulting in regulatory oversight.
Samsung, Xiaomi, Motorola, Realme and OnePlus are the five companies that are mentioned in the Competition Commission of India’s 1,027-page report stating that they were ‘involved in the practice of exclusive’ phone launches in ‘collusion’ with Amazon and its affiliates, hence violating competition law. For Flipkart, a separate 1,696-pager CCI report stated that the Indian arms of Samsung, Xiaomi, Motorola, Vivo, Lenovo and Realme followed similar practices.
"Exclusivity in business is anathema. Not only is it against free and fair competition but also against the interest of consumers," G.V. Siva Prasad, Additional Director General, CCI.
Needless to say, the inclusion of smartphone companies like Samsung, Xiaomi and OnePlus in the report will add to their legal and compliance work. The reports also state that the anti-competition practices by the aforementioned smartphone makers were rampant, despite them downplaying the allegations.
We tried contacting Xiaomi India but they refused to comment on this development. We have approached Samsung and Vivo for their comments and are awaiting their response to CCI’s accusations.
As per recent data from Counterpoint Research and CMR Research, smartphone companies Samsung, Xiaomi and Vivo (the top three in India as per Q2 2024 results) hold a combined market share of around 55 per cent. All three of these companies have been named in the CCI reports. Furthermore, as per data from Datum Intelligence, it is estimated that in 2023, 50 per cent of phone sales were online last year, showing an increase of 14.5 per cent from 2013. Flipkart had a 55 per cent share in online phone sales in 2023 while Amazon was part of 35 per cent of the phones sold.
These findings come at a very delicate time. The festive season in India is one of the most crucial times for consumer tech companies where they can amplify their revenue. In addition to that, the antitrust allegations might turn out to be a major setback for these companies who have been facing backlash from offline retailers for years for taking away their share of the market and hurting their business. Not only this, the CCI reports also state that Amazon and Flipkart used their foreign investments to offer subsidized rates on warehousing and marketing services to select sellers.
There are, however, counterarguments to these accusations as well. “Yes, they want brands to spend more on their platforms to give them prominent display and listings, which are by the way labelled 'sponsored', but no consumer looking to buy online ever faces a situation where they cannot explore a smartphone of choice,” says Mohammad Faisal Kawoosa, Chief Analyst, Techarc.
Pushing particular products and blocking shelves for select brands (brands who pay retailers to do so and brands whose products have higher margins) have been a long-standing practices among offline retailers. “What has been done to protect the interests of consumers there? Market transparency and fair trade should be omnipresent, i.e., in both online and offline retail,” adds Kawoosa.
The investigation by the CCI was triggered in 2020 by a complaint from an affiliate of the Confederation of All India Traders, the largest retailer association in the country with 80 million members. In the coming weeks, the CCI will review objections, if any, to its findings from Amazon, Flipkart, smartphone companies and the Confederation of All India Traders. Along with potentially imposing fines on the accused entities, the CCI can also pass a mandate for the companies to change their trade practices. As per the reports, the CCI has asked smartphone companies Xiaomi, Samsung, OnePlus Realme and Motorola to submit their financial statements for the last three fiscal years, certified by an auditor.
This is not the first time that the Competition Commission of India has had its sights on tech companies. In 2021, the CCI went after WhatsApp and Facebook after consumers were asked to accept a new policy that allowed WhatsApp to share consumers' data with Facebook. In October 2022, the CCI accused Google of exploiting its dominant position in the market and imposed a fine of USD 160 million for ‘unfair’ trade practices. This investigation began in 2019. The CCI had also been investigating Apple since 2021 and in July 2024, the investigation found that Apple exploited its dominant position in the market for app stores on its iOS operating system, engaging ‘in abusive conduct and practices’. This was also a time when Apple was facing similar accusations in other regions. The Indian case was first filed by a non-profit group called 'Together We Fight Society' which argued Apple's in-app fee of up to 30 per cent hurt competition. This report against Apple, however, was recalled by the CCI in August 2024.
With India's online retail market set to cross USD 160 billion by 2028, as per data from consultancy firm Bain, it will be interesting to see what this investigation brings forward and how it impacts consumer tech giants like Samsung, Xiaomi and Vivo.
