Asmbhav Summit moots stricter regulation, central agencies led investigation over foreign platforms

New Delhi, April 15 The 'Asmbhav Summit', successfully held virtually across India representing the voices and aspirations of lakhs of small retailers and traders across India saw enthusiastic participation from participants across industry.

A key point that emerged was the need for stricter regulation and penalization for wrongs done by the foreign retailers posing as marketplaces.

According to Ashwani Mahajan from Swadeshi Jagran Manch, "Some government agencies have now become active and vigilant. ED is one while the Competition Commission of India (CCI) is also investigating and has gone to court too. My request is for the RBI to investigate FEMA violations wherever these have taken place so that the foreign platforms, if they are defaulters, can be checked and stopped".

The panelists were of the view, put forth by Mahajan when he said, "Believe me, and I say this with full responsibility, that these foreign retailers are all working illegally in India. These companies are operating in my country through deception in e-commerce, since otherwise, as per law, they can only operate under certain clearly stated restrictions. For instance, they can only run a platform, implying that these companies cannot keep any stocks, sell own label brands, or offer market discounts. Unfortunately, and to the detriment of our small sellers and even the entire Indian market, foreign retailers, under the guise of running platforms, have blatantly misused their money and influence to wield their clout and twist the regulations at will. We hope that our coming together at Asmbhav will prod the government and our institution to quick and effective action."

The key points that emerged from the various deliberations go to the very nub of the issues that are destroying the small trader who has gone largely unseen and unheard so far.

The central issue of the summit was the absence of implementation of rules and laws through oversight and loopholes. Speakers agreed that there was a need to urgently strengthen our regulatory system so that errant foreign retailers may be brought under control. For this, it was stated, our institutions had to work as mandated, and, over and above all, there is political will.

Another tent-pole of the discussion was the issue of monopoly and how CCI law and FDI laws need to be re-worked. According to Pranav Sachdeva, Advocate on Record, Supreme Court, "We should not focus too much on FDI law since these e-com giants do not technically violate these. We must focus on competition law being violated and create a policy that stops retailers above a certain size from becoming sellers."

Elaborating on this, MM Sharma, Advocate, Head - Competition Law & Policy, from Vaish Associates Advocates Law opined, "Effective enforcement of law through CCI is an absolute must now. Predatory pricing cannot be applied as a contravention since none of the players can be designated as 'dominant'-only one entity can be dominant as per competition law".

The systemic illegality of the so-called platforms operating as marketplaces was highlighted. According to Sharma, "There are three clear aberrations of the new digital marketplace: Self-preferencing, abuse of dominance, foreclose of data access in acquiring potential customers." According to Chanakya Basa, a legal expert, "The need of the hour is objective dispute resolution between the platform and the aggrieved retailers and, where applicable, a deterrent penalty. In many cases, we now see the crying need for an Ombudsman also."

The issue of ill-treatment of small retailers at the hands of so-called platform owners turned marketplaces assumed centre-stage. According to Abhay Raj Mishra, PRAHAR, "the small to medium sized traders have been constantly subjected to a cruel bias by the foreign retailers. It is apparent that these merchants serve no other purpose than just becoming lifeless statistics for the large platforms to claim bragging rights on reach and depth."

Bewailing their plight, the All-India Online vendors Association (AIOVA) spokesperson said, "When we failed to find solutions to our issues of mistreatment and arbitrariness by the monopolistic platforms, we reached out to the government five years ago, who ignored our complaints saying we were just 0.5 per cent of retail then. Today, as per the government figures we have a seven percent share. Hope we shall be heard now." Said Abir Roy of Sarvada Legal, "Today, it is the CCI that can give relief. My recommendation is that the SEBI example can be a good one to emulate. There should be no relation between sellers and platform at all, no common employees, no holding, no equity."

The contentious matter of data was also extensively discussed. As per Parminder Singh from IT for Change, "The central issue that faces us today is data ownership. With a single entity controlling all data, power fully resides with that entity always. This has to be addressed and data must be made democratic and free."

One of the key issues discussed related to loss of livelihoods through predatory pricing and arbitrary contracts. According to Arvinder Khurana, AIMRA, "The large e-commerce portals are flouting FDI rules at every level and tying up directly with brands and offering deep discounts that none of us can match. As a result, over 40,000 mobile shops have shut down in the last two years. Portals now have 55 percent market share in mobiles whereas mobile shops have seen 60 percent loss in business."

The Summit also included views and observations by Vijay Gopal, a former Amazon manager, who brought to light the unsavoury practices of arbitrary legal contracts and sudden modifications to the modes of engagement between small retailers and the large foreign retailers. He said, "Fundamental rights are suspended in e-commerce, so to speak; anyone can be ousted, or terms changed at will without assigning any reason."