Samsung, Xiaomi, and several other smartphone makers have been accused of working with Amazon and Flipkart to release their products on specific e-commerce platforms as a violation of India's antitrust laws.

The investigated companies targeted specific sellers and listings, forming the anti-competitive structure of the Indian market, the documents from the Competition Commission of India (CCI) available to Reuters showed.

Antitrust Violations Made by Flipkart and Amazon

Some of the newly investigated CCI cases revealed that Amazon and Flipkart engaged in practices that were contrary to the local competition regulations by giving preferential treatment to certain sellers, hence a "collusion" was made.

This practice comprised of limited product releases to a certain group significantly slashed prices, and preferred listings demeaned smaller retailers and businesses.

Thus, according to Reuters, these e-commerce giants were named in the reports of CCI as the culprits who skewed the competition in India's growing online retail business.

"Exclusivity in business is anathema. Not only is it against free and fair competition but also against the interest of consumers," CCI's additional director general G.V. Siva Prasad wrote in the related reports regarding the antitrust probe.

Smartphone Makers Involved in Exclusive Launches

This anti-competitive practice was also revealed to involve leading smartphone manufacturers like Samsung Xiaomi Motorola Realme and OnePlus. These companies tied up with the e-commerce giants Amazon and Flipkart to release new products online only thereby eliminating direct physical stores and other online retailers in India.

These allegations are recently corroborated by the CCI report on Amazon which is as voluminous as 1,027 pages and the Flipkart report which is as thick as 1,696 pages wherein similar practices with the smartphone makers like Vivo and Lenovo were highlighted.

Legal and Compliance Challenges for Smartphone Giants

Samsung and Xiaomi are some of the prominent smartphone manufacturers that are roped into this investigation; this means that this investigation increases their legal and compliance concerns. Then we knew that Reuters was the first to break the news that these companies had been named formally by the CCI as being involved in anticompetitive practices.

Some of the smartphone manufacturers involved include Xiaomi which however did not respond to the report about the topic while the e-commerce platforms did not reply to the comment request at the time the report was being done.

During the investigation, as the reports suggest, both Amazon and Flipkart denied the allegations but the CCI opined that exclusive launches were prevalent.

Effects on the Smartphone Market in India

Samsung and Xiaomi dominate the Indian smartphone market with a combined market share of 35.7% and 36.5% respectively while Vivo has 19 % of the market share as per Counterpoint research.

Bain & Company has predicted the total e-retail market size in India will grow past $ 160 billion in 2028 from the estimated market size of $ 57- $ 60 billion in 2023. These findings are a major blow to Amazon and Flipkart, and the smartphone makers implicated in this investigation, in this major growth market.

Advantages for Select Sellers, Problem for Retailers

The CCI investigation also exposed that Amazon and Flipkart through their cross-border investments offered some soft services such as warehousing and marketing at below cost to some sellers. This practice helped specific sellers to gain a lot at the expense of other small retail selling and other businesses who could not compete with the offers of cheaper and many kinds of products offered online.

Furthermore, these e-commerce platforms and makers of Smartphones are often accused of foul play by Indian retailers stating that the strategy of the availability of certain phones online only has a serious dent on their business.

They are still under investigation, and possible penalties regarding the case are not yet known.

Some of the companies that have been asked by the CCI to produce the financial statements include Xiaomi, Samsung, OnePlus, Realme, and Motorola among others, for the fiscal year up to 2024/2025.

That investigation, which began after a 2020 complaint from the Confederation of All India Traders, will now go ahead with the review of objections filed by Amazon and Flipkart as well as smartphone makers and the retailer association.

The CCI could fine all the concerned parties heavily and could also ensure alterations in their operations as per the conclusion of the investigation that it could undertake.