The Karnataka High Court ruling which has allowed the Competition Commission of India (CCI) to investigate Amazon and Flipkart against anti-competitive practices is going to be a game changer and will impress upon the government to initiate strong action against the two companies, Praveen Khandelwal, National secretary general of Confederation of All India Traders (CAIT) said in an interaction with Moneycontrol.
He also spoke about why CAIT is not against the online commerce model but the alleged malpractices of the leading players that has impacted the livelihoods of hundreds of small traders. Edited excerpts.
Q. How do you think that this judgment will be a game changer for the industry and smaller traders?
Praveen Khandelwal: In a detailed judgment of more than 51 pages, the Karnataka High Court has dealt with all the issues of malpractices raised by us or on which we made a complaint to CCI and on which CCI acted upon for the investigation.
Now it will with impress upon the government to initiate some kind of strong actions against Amazon and Flipkart, because they are doing day light robbery and everyone knows it. Everybody knows that Amazon and Flipkart are indulging into predatory pricing, deep discounting, controlling inventory and all these things have been prohibited under Press Note 2 of FDI policy.
In spite of the fact that these companies are sustaining losses every year, they are surviving. In our Indian business system, when a business goes into the losses, the experts say that it is a prudent exercise to wind up the business, why to continue with the business which is accruing losses. But these people are not only sustaining the business but also indulging into many kinds of sale activities.
One action (that the government should take) is the immediate issuance of already drafted Press Note replacing the existing PressNote2.
Secondly, as we have demanded several times that e-commerce business in India is being carried by violation of laws. So therefore there is an emergency need to set up a monetary authority to monitor or to regulate the ecommerce business and in case anyone is violating the law, immediate action should be taken.
Currently a policy has been made and for the violation and we are require to go to Enforcement Directorate. While ideally the authority which is drafting the rules of the law should be empowered to protect its own laws. The authority should have the power to take actions or impose penalty.
Q. How have the traders been impacted in the last few years? Do you think it is in their favour to adopt e-commerce?
Praveen Khandelwal: The middle class which was earlier visiting the physical market has started acquiring their needs from e-commerce. So that means the ecommerce spectrum is certainly good business opportunity for everybody. Last year there was an increase of 36% of ecommerce business. This has been in tier 2 and tier 3 cities.
The PM has also said that there is an urgent need for the small traders to upgrade, modernise and computerise their business format and they must also use the ecommerce platform.
But now the question is, that if these companies (Amazon-Flipkart) are allowed to undertake all kinds of malpractices, it will not be worthwhile exercise for the small traders to target this. Therefore, this Karnataka judgment is certainly going to be a milestone.
Q. We now see that CAIT has started accepting online commerce as a boon for traders.
Praveen Khandelwal: From day one we are not against ecommerce per se. We were against the way (it was used by) certain companies including Amazon and Flipkart.
Currently my traders have to adhere to at least 15-20 different set of laws. If they violate even one, the police comes into the picture. They end up getting notices. They could also be jailed and the trial will go on.
I just want to ask if India has two types of laws? One for Amazon and Flipkart and another one for small traders.
Rule should be equal for all. So if I am brutally bound to comply by the laws, it should apply to the e-commerce companies also.
Q. But Amazon has been consistently saying it has always followed law of the land.
Praveen Khandelwal: For the sake of the argument let us accept that they are compliant. Then the question is why are they opposing the investigation of CCI? They should allow CCI to investigate their business model.
The investigation by CCI is the best opportunity for Amazon and Flipkart to come out with victorious colours that the charges levelled against them are baseless.
Q. Amazon and Flipkart have the option to move the higher court. To what extent will you continue to put up the fight?
Praveen Khandelwal: What is the option left with us? Whenever they will file any they will have to make CIAT and Delhi Vyapar Sangh parties because we are the ultimate complainants. So we have no choice but to fight the legal battle, whether it is in double bench of Karnataka High Court, or Supreme Court or at any other forum and believe me, traders of the country are well prepared to take this fight to its logical end.
Q. How many traders in India are impacted because of the alleged loophole in the marketplace model?
Praveen Khandelwal: So far no credible survey has been conducted. But to the best of my knowledge and understanding, I feel that there must be at least two to three crore traders and small traders in the country who have been badly affected by this because these malpractices are not allowing the genuine traders to make sense. I was told that last year almost 15,000 mobile shops were closed. So giving a number will not be appropriate because no credible survey has been undertaken. But this large number of small traders has been displaced from their business and are in a mass state of unemployment.
Q. So for you e-commerce is an asset. You just have an issue with the loopholes in the marketplace model?Praveen Khandelwal
: We have never criticised e-commerce. We would rather have our own e-commerce portal Bharat e-market launched. We have already been on boarding sellers. If everything goes right, we will launch it in July. But let there be a transparent, honest and seamless business in e-commerce landscape.