Business

Cross subsidisation on e-commerce platforms, a concern, says NITI Aayog chairman

Updated : August 30, 2019 02:30 PM IST

The CCI will have to look into to what degree of cross subsidisation can be permitted: Rajiv Kumar

NITI Aayog chairman reasoned that there can be situation where subsidy from one business to another might become predatory

The rivalry between e-commerce companies and physical retailers is natural. Speaking on this issue in detail at an e-commerce workshop organised by CCI on Friday, NITI Aayog Chairman, Rajiv Kumar said that India’s retail market was large enough for both the overarching categories.

He however voiced his concern about cross subsidisation and access of individual data by big e-commerce players. Referring to a report by the Organisation for Economic Co-operation and Development (OECD), he said, “E-commerce platforms sometimes can have a conglomerate effect when on the same platform you can have a large number of unrelated activities. The Competition Commission of India (CCI) will have to look into to what degree of cross subsidisation can be permitted across business.”

OECD’s report titled, “Implications of E-commerce for Competition Policy” reads, “Recent enforcement and advocacy work of a number of competition authorities has showed potential for anti-competitive behaviour to occur within the online environment. Fears regarding potential market segmentation are therefore a notable concern within a number of agencies which have examined the issue of competition within the e-commerce sector.”

The NITI Aayog chairman further reasoned that there can be situation where subsidy from one business to another might become predatory and prevent new entrants or push out existing participants.

He said, “A big problem can occur when e-commerce platforms combine with their own brick and mortar facilities. That way they can control large segments of the economy and create monopoly and anti-competitive entities.” He added, “Imagine a situation when you have a conglomerate controlling the media and advertising e-commerce and other large businesses. The impact of such a conglomerate on our lives and policy making is something which we should be concerned about.”

ACCESS TO INDIVIDUAL DATA

The NITI Aayog chairman also voiced his worry about data protection and the underlying strength e-commerce derive from the data they collect.

He said, “Data is something which we need to carefully look at as to how it will be used by e-commerce. Access to data and individual consumer data can give immense power.” He further wondered, “How does CCI act with other authorities to ensure that data is not used to create unprecedented market power? You can't have a situation where data is controlled by a single authority.”

Rajiv Kumar said that data related policy has to be made in consultation with the industry. He clarified that he was an advocate a liberal FDI regime in e-commerce and retail. “New India needs a retail sector that uses technology well”, he said.

Cross subsidisation on e-commerce platforms, a concern, says NITI Aayog chairman

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