Laws Toothless On E-Tailers Predatory Pricing In India

Additional changes in existing laws for clarificatory purposes are always a welcome move, but overhauling the entire regime may not be warranted - Sanjay Khan Nagra, partner, Khaitan & Co, tells Bizz Buzz 

New Delhi: Union Commerce & Industry Minister Piyush Goyal’s remarks last month on the alleged ‘predatory pricing’ by e-commerce giants such as Amazon triggered a row. He did try to downplay the impact of his remarks the next day, but the issue hasn’t died down.

The row also raises an important question: do we have legal provisions to check predatory pricing by ecommerce giants like Amazon? Small traders of strong view that predatory pricing by ecommerce giants has been taking a heavy total on small shops, kiranas and other neigbhourhood retail stores.

Bizz Buzz spoke to several legal experts about the issue. Sanjay Khan Nagra, partner, Khaitan & Co, said: “While India already has provisions against predatory pricing under existing laws, there is always some challenge in their effective implementation. Strengthening enforcement mechanisms and ensuring timely action can significantly deter such practices and promote a level playing field for businesses.”

Supreme Court lawyer Virag Gupta, while saying that a legal framework exists to combat predatory pricing, demands action against the wrongdoers.

“When the Minister himself says that there is predatory pricing, he must be saying this because there is some evidence. Therefore, it is time to act against those who have been violating our laws.”

He also highlighted Goyal’s statement that Amazon “paid Rs1,000 crore to professionals.” Goyal’s insinuation was quite pointed: “I don’t know who those professionals are. I am myself a Chartered Accountant, I have done law, but I would love to know which CAs and lawyers get Rs 1,000 crore, unless you are paying all the top lawyers to block them so that nobody can fight a case against you.”

A corporate lawyer, who didn’t want to be named, said that a big problem is that no law defines predatory pricing. While the Competition Commission of India can define and check it, doing such things is never easy, he said.

What distinguishes competitive pricing from predatory pricing? And normal profits from windfall profits? It is very difficult to answer these questions, he said. Then there is also the issue of ease of doing business (EoDB). The measures to check alleged predatory pricing and other unsavory practices should not become too onerous and bothersome for businesses. The government has to strike a balance between the interests of consumers and companies.

How can this be done? Do we need a new law? Sanjay Khan Nagra doesn’t think so: “Additional changes in existing laws for clarificatory purposes are always a welcome move but overhauling the entire regime may not be warranted.”

Virag Gupta believes that “an effective regulator is needed.”