The Forum for Internet Retailers, Sellers & Traders (FIRST) has lodged a 157-page complaint with the Competition Commission of India (CCI) against Walmart-owned Flipkart Group, accusing the e-commerce giant of implementing a structural and operational mechanism to distort competition, according to a report by the Times of India. The complaint, filed on July 2, alleges that Flipkart sustains deep discounting across product categories at a marketplace-wide level and uses a "self-replenishing reservoir of funds" — estimated at about Rs 3,000 crore annually — generated through the reduction or avoidance of GST liabilities related to its logistics and fulfilment operations to finance "exclusionary pricing conduct." FIRST is an affiliate of the India SME Forum. Flipkart did not respond to queries from the Times of India.
Allegations of Distorted Competition and Preferred Sellers
According to FIRST, Flipkart, through its B2B arm Flipkart India, supplies goods below procurement cost to a set of 33 preferred sellers, which in turn resell those goods on Flipkart’s marketplace at below-cost prices. FIRST argued in the complaint: "It is submitted that Flipkart has structured its operations to operate an inventory-based model in substance while presenting itself as a marketplace in form." This practice, FIRST alleges, constitutes anti-competitive arrangements in contravention of Section 3(4) of the Competition Act, and the company's abuse of dominant position violates Section 4 of the Competition Act. FIRST seeks an investigation into the conduct of the Flipkart Group and an examination of the role of all entities involved.
Financing Exclusionary Pricing Through GST Avoidance
The complaint contends that Flipkart generates a "self-replenishing reservoir of funds" of approximately Rs 3,000 crore annually by reducing or avoiding GST liabilities on its logistics and fulfilment operations. "This subsidy pool is deployed through the ecosystem of preferred sellers in the form of incentives, rebates and discounts....ultimately reflected in lower retail prices that independent sellers cannot match without sustaining significant losses or being driven out of business," FIRST alleged.
Earlier Complaints and Pending Investigation
This is not the first time Flipkart has faced CCI scrutiny. In 2020, CCI initiated an investigation into alleged malpractices by Flipkart and Amazon India following a complaint by another trade body, Delhi Vyapar Mahasangh. That matter has yet to result in a final order, according to the Times of India. Small traders have long protested against the practices of online marketplace giants, leading the government to tweak FDI rules in e-commerce in 2018. Separately, small retailers led by the All India Consumer Products Distributors Federation (AICPDF) are currently opposing Flipkart and Amazon’s aggressive quick commerce push, raising concerns over FDI policy compliance and deep discounting. The fresh complaint comes as Flipkart prepares for a public listing on Indian stock exchanges.
Impact on Small Sellers and Market Access
FIRST argued that "foreclosure of access from the Flipkart marketplace platform effectively forecloses the access of these independent sellers to 60% of the e-commerce sector (in terms of GMV)." Vinod Kumar, president of India SME Forum and founder trustee of FIRST, confirmed the CCI filing to the Times of India, stating: "India SME Forum fully supports innovation, investment and the growth of e-commerce. At the same time, platform neutrality and equal opportunity for all sellers are essential if MSMEs are to fully realise the benefits of the Govt’s reforms. Our representation before the CCI seeks an objective examination of these issues."
What Sellers Should Know
Cross-border e-commerce sellers and marketplace operators should closely monitor this case, as an adverse finding against Flipkart could reshape marketplace regulations in India, particularly around deep discounting, seller parity, and FDI compliance. Sellers on Indian platforms should review their own contracts and pricing strategies to ensure they are not inadvertently violating competition laws. The CCI has not yet announced its decision on whether to order a fresh investigation, but the complaint references ongoing concerns that have already prompted regulatory changes in 2018.
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