CCI Notifies Deep-Discounting Rules for E-commerce Sites: Report
The Competition Commission of India (CCI) has recently notified new rules on cost of production regulations to curb predatory pricing or deep discounting on e-commerce and quick-commerce sites. According to a report by CNBC-TV18, the CCI has introduced a formula to calculate the cost of a product or service, and any attempt to sell products and services below this cost will constitute predatory pricing.
The move is aimed at promoting fair competition and preventing e-commerce companies from engaging in anti-competitive practices that harm consumers and small businesses. The CCI has been actively monitoring the e-commerce sector, particularly in the wake of the COVID-19 pandemic, which has seen a surge in online sales.
The new rules are expected to have a significant impact on the e-commerce industry, which has been characterized by intense competition and deep discounting. Many e-commerce companies, especially those backed by foreign investors, have been accused of engaging in predatory pricing to gain market share and eliminate competition.
The CCI’s notification comes as a response to concerns raised by small businesses and brick-and-mortar retailers, who have complained that e-commerce companies are using deep discounting to undercut them and gain an unfair advantage. The CCI has been under pressure to take action to address these concerns and promote fair competition in the e-commerce sector.
Under the new rules, e-commerce companies will be required to calculate the cost of production of a product or service using a formula provided by the CCI. The formula takes into account various factors such as the cost of raw materials, labor, and other expenses. Any attempt to sell a product or service below this cost will be considered predatory pricing and may attract penalties.
The CCI’s notification also provides guidance on how to determine the cost of production of a product or service. The regulator has specified that the cost of production should be calculated based on the average cost of production over a period of time, rather than a single transaction.
The new rules are expected to have a significant impact on the business models of e-commerce companies, which have been built around deep discounting and aggressive pricing. Many e-commerce companies have been using deep discounting as a strategy to attract customers and gain market share, but this practice has been criticized for harming small businesses and consumers.
The CCI’s notification is also expected to have implications for the quick-commerce segment, which has been growing rapidly in recent years. Quick-commerce companies, such as Swiggy and Zomato, have been offering deep discounts and promotions to attract customers and gain market share.
In response to the CCI’s notification, e-commerce companies have said that they will comply with the new rules and adjust their business models accordingly. Many e-commerce companies have expressed support for the CCI’s efforts to promote fair competition and prevent anti-competitive practices.
The CCI’s notification is a significant development in the e-commerce sector, which has been growing rapidly in recent years. The regulator’s efforts to promote fair competition and prevent anti-competitive practices are expected to have a positive impact on the sector and promote a level playing field for all businesses.
Source: https://x.com/CNBCTV18Live/status/1920135535101956525
