Lack of transparency on discounts on online platforms affecting competition: Report

Differential discounting structure in leading platforms across sectors like  e-commerce, food, and hospitality among others affects competition and the playing field on the platform, a report by the Competition Commission of India (CCI) has found.

There is no transparency on what basis discounts are provided to a particular seller or service provider on a particular product and that creates apprehension among sellers and service providers that platforms use discounts as a discriminatory device, the report has found.

"In the case of vertically integrated platforms... platforms' own products/ related entities benefited from higher discounts, which... meant higher consumer traffic and better competitive market position for these products/players," the report, titled 'Market Study on E-commerce in India: Key Findings and Observations', said.

In the service categories, when intermediary platforms offer discounts over and above the price set by the service provider, the service provider loses control over the final price that is offered to the customer.

"The final discounted price on online platforms has obvious influence on consumer expectation with respect to price of the same product available through other channels, for instance in case of walk-in bookings in hotels or in case of dine-in in restaurants," the report said.

The report noted that the discount offered on the platforms is such that the service providers are not able to profitably match the same in the other modes of booking.

"This... creates an artificial price-distortion and drives consumers increasingly to online platforms, which in turn leads to higher dependence of service providers on these intermediary platforms," the report said.

The report asked platforms to bring out clear and transparent policies on discounts, including the basis of discount rates funded by platforms for different products and suppliers and the implications of participation and non-participation in discount schemes.

The report also asked platforms to set out a clear and transparent policy on data that is collected on their platforms, the use of such data by the platforms and also the potential and actual sharing of such data with third parties or related entities.

Initiated by CCI in April last year, the study focuses on competition among online platforms in e-commerce, sellers, service providers such as hotels and restaurants, and payment service providers among others.

The study comes in the backdrop of concerns expressed by associations representing various industries and sectors along with traders’ community such as Confederation Of All India Traders and National Restaurant Association of India among others. They have been alleging unethical trade practices by platforms such as Flipkart, Amazon, Zomato, Swiggy, and OYO.