Samsung, Xiaomi and other smartphone makers conspired with Amazon and Walmart Inc’s Flipkart to launch products exclusively on the e-commerce companies’ Indian websites, violating antitrust laws, according to regulatory reports seen by Reuters.
Reuters reported this week that an antitrust investigation by the Competition Commission of India (CCI) found that Amazon and Flipkart violated local competition laws by favouring certain sellers, prioritising certain products and offering deep discounts on products to the detriment of other companies.
The CCI’s 1,027-page report on Amazon also said that the Indian subsidiaries of five companies — Samsung, Xiaomi, Motorola, Realme and OnePlus — had “conspired” with Amazon and its affiliates to launch exclusive mobile phones in violation of competition laws.
In the Flipkart case, the 1,696-page CCI report found that the Indian subsidiaries of Samsung, Xiaomi, Motorola, Vivo, Lenovo and Realme were also guilty of similar conduct.
The addition of smartphone makers such as Samsung and Xiaomi to the suit could increase legal and compliance headaches for the companies.
“Exclusivity in business is anathema. It is not only against free and fair competition but also against the interest of consumers,” CCI Additional Secretary GV Siva Prasad said in a similar finding in the report on Amazon and Flipkart.
Reuters first reported that the CCI’s confidential report dated August 9 accused smartphone companies of anti-competitive behaviour.
Xiaomi declined to comment, while other smartphone makers also did not respond to requests for comment.
Amazon, Flipkart and the CCI have not responded and have not commented on the report’s findings so far.
Both CCI reports said that Amazon and Flipkart “deliberately downplayed” allegations of monopoly selling during the investigation, but the authorities found that the practice was “pervasive.”
South Korea’s Samsung and China’s Xiaomi are the two largest smartphone makers in India, with a combined market share of about 36%, followed by China’s Vivo at 19%, according to data from Counterpoint Research.
Consulting firm Bain estimates that India’s e-retail market is expected to exceed $160 billion by 2028, up from $57-60 billion in 2023.
The findings are a major setback for Amazon and Flipkart, which for years have faced the ire of small retailers for hurting their offline businesses in key growth markets.
The CCI also said the companies used overseas investments to subsidize services such as warehousing and marketing to certain distributors.
A surge in online sales
According to an internal CCI document dated Aug. 28 and seen by Reuters, some smartphone companies, including Xiaomi, Samsung, OnePlus, Realme and Motorola, have been ordered to submit financial statements certified by auditors to the CCI for the three years up to 2024.
The investigation into Amazon, Flipkart and its sellers began in 2020 after complaints from affiliates of the Confederation of All India Traders, India’s largest retail association with 80 million members.
The CCI will consider challenges to the findings from Amazon, Flipkart, retailer associations and smartphone companies in the coming weeks and may require the companies to change their business practices and impose fines, people familiar with the matter said.
Indian retailers have repeatedly criticised Amazon, Flipkart and smartphone companies for launching phones exclusively online, claiming that storeowners are unable to get the latest models and customers suffer losses as they search on shopping sites.
“The exclusivity had a severe impact not only on general sellers on the platform but also on brick-and-mortar retailers who were supplied with the phones much later,” the two CCI reports said, citing analysis of data from smartphone companies.
Indian research firm Datum Intelligence estimates that 50% of mobile phone sales were made online last year, up from 14.5% in 2013. Flipkart is expected to hold 55% of online mobile phone sales by 2023, followed by Amazon with 35%.
