FIRST Files CCI Complaint Against Flipkart Over Alleged Rs 3,000 Crore Subsidy Pool
The Forum for Internet Retailers, Sellers & Traders (FIRST) has filed a 157-page complaint in Mumbai with the Competition Commission of India (CCI) against the Walmart-owned Flipkart Group. Filed on July 2, the complaint seeks a fresh investigation into the e-commerce giant's marketplace conduct, alleging unfair business practices, deep discounting, and tax avoidance that distort competition.
FIRST, which is an affiliate of the India SME Forum, alleged that Flipkart has established a structural and operational mechanism to facilitate and sustain deep discounting across its platform. According to the complaint, this practice excludes independent small retailers from the marketplace system.
The trade association alleged that Flipkart generates a "self-replenishing reservoir of funds" estimated at approximately Rs 3,000 crore annually. This pool is reportedly created through the reduction or avoidance of Goods and Services Tax (GST) liabilities related to its logistics and fulfilment operations.
FIRST claimed this subsidy pool is deployed through preferred sellers in the form of incentives, rebates, and discounts. The group argued this results in lower retail prices that independent sellers cannot match without sustaining significant losses or being driven out of business.
The complaint further alleged that Flipkart operates an inventory-based model in substance while presenting itself as a marketplace in form. Through its B2B arm, Flipkart India, the company allegedly supplies goods below the cost of procurement to a set of 33 preferred sellers, who then resell those goods on the marketplace at below-cost prices.
Vinod Kumar, president of the India SME Forum and founder trustee at FIRST, confirmed the filing. Kumar stated that platform neutrality and equal opportunity are essential for micro, small, and medium enterprises (MSMEs) to realize the benefits of e-commerce.
The association argued that these arrangements contravene Section 3(4) of the Competition Act, while the alleged abuse of dominant position violates Section 4 of the Act. FIRST stated that being blocked from the platform effectively deprives independent sellers of access to 60 percent of the e-commerce sector in terms of gross merchandise value (GMV).
Flipkart did not respond to queries regarding the complaint.
