Traders’ body alleges nexus between banks & e-com cos
| Date :25-Nov-2020 |
Business Bureau :
Highlighting the cash back incentives and discounts offered by banks on purchase of goods from e-commerce portals of Amazon, Flipkart and other e-commerce portals, the Confederation of All India Traders (CAIT) on Tuesday levelled serious charges against the financial institutions of making an unholy nexus with the companies leading to infringement of Fundamental Rights of the traders and consumers. CAIT said it is violating Preamble of the Constitution of India and FDI Policy of the Government. The traders body also charged the banks for making a cartel with Amazon and Flipkart for promoting unfair practices.
“We shall be filing a separate complaint to the Competition Commission of India (CCI) demanding investigation against cartel between Amazon-Flipkart and banks since such nexus is proving to be a death knell for the small businesses in India,” said B C Bhartia, National President and Praveen Khandelwal, Secretary General of the CAIT. In a communication sent to the Governor of Reserve Bank of India, CAIT mentioned various schemes of the different banks for giving 10 percent discount / cash back on a regular basis from time to time for purchase of any product from the portal of e-commerce companies Amazon and Flipkart. These banks include HDFC Bank, State Bank of India, ICICI Bank, Citi Bank, Kotak Mahindra Bank, HSBC, Bank of Baroda, RBL Bank, Axis Bank etc.
Bhartia and Khandelwal said that the banks are providing these cash discounts only on purchase of goods from e-commerce by making payment through their debit / credit cards. “But if the same goods are purchased from a brick-and-mortar shop, this discount is not provided to the customers. This act of the banks clearly discriminates between two sets of traders thus violating Preamble of the Constitution of India which guarantees “Equality” and restricts the consumers to purchase goods from off-line shops which violate Article 19 and Article 301 which guarantee Freedom of Trade and Commerce in the country. Bhartia and Khandelwal further said providing cash back exclusively to on-line shoppers through portal of Amazon and Flipkart assumes the status of a cartel which leads to providing help to the e-com companies for indulging into mal-practices of maintaining predatory pricing, exclusivity and creation of an uneven level playing field in the market which is specifically restricted under Press Note No.2 of the FDI policy.
Bhartia and Khandelwal said that it is a cartel between Amazon and Flipkart with the banks which also encourages unfair competition in the market which is prohibited under Section 3(1) read with Section 3 (3) of the Competition Act. Section 2 of the Competition Act among other things prohibits agreements which cause or are likely to cause an appreciable adverse effect on competition in India. CAIT urged the concerned authorities to take immediate cognisance of the matter and issue directives to the banks to discontinue cash back offers with immediate effect and initiate proceedings as prescribed under the law against the banks.