A few years ago, retailers had protested the ways of private online platforms. Small shops claimed to be victims of a power imbalance, one that India’s 2022-launched ONDC was expected to help redress.
If last week’s complaint by product distributors evokes a sense of déjà vu, it’s because a charge of predatory pricing has been levelled again, this time against quick-commerce firms.
The All India Consumer Products Distributors Federation (AICPDF), which represents some 400,000 entities that distribute fast-selling stuff made by major companies, wants the Competition Commission of India to probe quick-delivery players like Zepto, Zomato’s Blinkit and Swiggy’s Instamart for their alleged violation of rivalry rules by selling wares at unfairly low prices to lure customers through pricing policies that could drive other channels out of business.
The AICPDF’s letter to India’s antitrust authority not only states that quick-commerce firms have begun dealing directly with many manufacturers, putting the survival of regular retailers at threat, but also alleges that significant control of inventory at dark stores amounts to a violation of law.
Networks of dark store-houses have enabled quick-commerce leaders to home-deliver groceries within spans as short as 15 minutes and the rapid adoption of these zippy services may have been at the cost of neighbourhood shops to a significant extent. The legal status of these stores may need a look-in.
But if this format finds itself under an antitrust lens, its legitimate factors of success must not get mixed up with muscles flexed to bully the market. Speed of delivery, this format’s edge, is the principal innovation that has attracted customers. This is just a mark of the retail sector’s evolution.
The unfair part, as alleged, is how quick deliveries are priced. Is it harming other retailers? This cannot be determined without a look at details. As with the appeal of swiftness, we can’t fault tech-driven cost efficiencies that let these startups operate on thin margins.
As for bulk deals with suppliers to strike bargains and reduce price tags, this practice only captures a transition from small- to large-format retailing. Economies of scale can spell big discounts that are not harmful. Since shoppers save money, all this is pro-market, even if corner shops lose footfalls.
Yet, heavily funded startups are often suspected of ‘burning cash’ to buy market share by selling products far below cost in an attempt to attain market dominance. If rich startups are deploying their coffers on a strategy of signing up people for habituation by paying their grocery bills (even partly), then the scrutiny of fair-play rules must apply.
The brute force of big money shouldn’t get to reshape retail dynamics in a manner that would let only a few players survive, depriving us of a well-contested sector.
In general, only evidence of competition rules being flouted can justify intervention in a market that should otherwise be free to evolve as guided by forces of demand and supply. It is true that antitrust cases often take too long to resolve.
Even the need of an investigation is yet to be decided. However, it is in the interest of quick-commerce businesses to have this controversy settled at the earliest. To that end, they could make disclosures in their defence that go beyond the usual regulatory requirements of transparency.
If their margins and account books reveal explainable and fair pricing, then the threat they’re perceived to pose may well be within the limits of fair competition.