Centre wants e-commerce firms to play to the rulebook

Centre wants e-commerce firms to play to the rulebook

The proposed amendment in rules governing them are due to complaints that their business practices are hurting offline and small businesses

E-commerce marketplaces could be in for close scrutiny and a tighter regime with the Indian authorities planning to amend existing rules governing them.

The decision follows complaints of smaller businesses in which big players in the field of e-commerce have been accused of manipulation and misusing their market dominance and hurting their livelihoods through deep discounting.

E-commerce marketplaces, including Amazon, Flipkart, Snapdeal, etc. might have to play to the rule book in future.

The proposed new rules under the Consumer Protection (E-commerce) Rules, 2020 seek to limit so-called 'flash sales' of goods and services by e-commerce companies. The conventional flash sales would not be banned, but special flash sales and back to back sales are to be under the lens. There is a feeling that such sales limit choices of customers, increase prices and prevent a level playing field.

The proposed amendments to the existing rules are based on the suggestions given by the federal Ministry for Consumer Affairs.

E-commerce companies will have to set up adequate redressal mechanisms and appoint a chief compliance officer. The firms would be required to name a resident grievance officer who has to be a company employee and a citizen of India. The grievance officer would be the nodal point of contact for law enforcement agencies.

Industry bodies and e-commerce firms have been given time until 6 July to submit their comments and suggestions on the proposed amendments in the rules.

Large e-commerce marketplaces such as Flipkart and Amazon are already facing some regulatory music following the initiation of an investigation against them by the Competition Commission of India (CCI) for their alleged abuse of market dominance and giving preferential treatment to sellers in which they hold indirect stakes. The CCI is also focusing in its probe on the deep-discounting practices undertaken by e-commerce marketplaces, which has led to complaints from offline retailers.

The big e-commerce market places are already on the back foot following the Karnataka High Court dismissed Flipkart and Amazon India's plea challenging CCI's probe earlier this month. They have now filed an appeal for relief against the HC order at a division bench of the HC.

The proposed new e-commerce rules intend to do away with preferential treatment to any seller by these marketplaces.

"No e-commerce entity which holds a dominant position in any market shall be allowed to abuse its market position... Every e-commerce entity shall, as soon as possible, but no later than 72 hours of the receipt of the order, provide information under its control or possession or the assistance to a government agency, which is lawfully authorized for investigative or protective or cybersecurity activities," the draft rule says.

Once implemented, it will become mandatory for the marketplaces to identify goods based on their country of origin and provide a filter mechanism at a pre-purchase stage for customers. They will have to offer alternatives to these imported goods to provide a "fair opportunity" to domestic sellers.

The proposed changes in rules put the liability for failure in the delivery of goods or services by a seller shall fall on the e-commerce marketplaces.

E-commerce firms, henceforth, will also have to register under the Department for Promotion of Industry and Internal Trade.