Abstract
Predatory pricing is becoming a major competition issue in the e-commerce space in India, where platforms use discounts and flash sales to gain market share. The CCI regulates predatory pricing under Section 4 of the Competition Act, 2002 in which predatory pricing is understood as pricing below cost for a significant or prolonged period of time with the intention of eliminating competitors. In 2025, the Determination of Cost of Production Regulations ushered in case-by-case an industry-neutral assessment of costs for the digital and quick-commerce sectors. This article examines the CCI’s evolving approach to regulation, notable precedents, and what may mean for consumer welfare and loss of traditional retail.
Introduction
India’s digital commerce revolution has reshaped consumer markets, with Amazon and Flipkart in the lead. The transformation of consumer markets is chiefly driven by discounting and more so aggressive discounting where products are offered at highly discounted prices to lure consumers.
While this may increase options for consumers and create competition in the marketplace, it is concerning when discounting jeopardizes fairness. Practices like deep discounting or flash sale pricing are now being viewed as predatory and are rotting competition, harmfully excluding smaller retailers, and hurting delivery business in the traditional sense.
The Competition Commission of India (“CCI”) plays an important role in balancing consumer welfare and protecting competition, while playing a significant role in resolving what the future of e-commerce will look like in India.
Legal Framework Governing Predatory Pricing
- The primary legal instrument used to combat predatory pricing in India is the Competition Act, 2002. Section 4(2)(a)(ii) prohibits an enterprise in a dominant position from applying “unfair or discriminatory pricing,” including predatory pricing.
- For conduct to be predatory, three criteria must be satisfied:
- The enterprise must be in a dominant position.
- Pricing must be below total cost of production, and to that effect, CCI is guided by average variable cost (AVC) or marginal cost benchmarks.
- There must be an intention to eliminate competition rather than merely compete to gain market share.
- The CCI has made clear on multiple occasions that not every instance of aggressive discounting is predatory; only such pricing by a dominant platform with the intention of suppressing competition may require regulatory attention.
The CCI’s Regulatory Approach: Deep Discounts and Flash Sales
Initially, the Competition Commission of India (CCI) treated discounts and flash sales as a normal market practice and only intervened in the case of a dominant platform. As e-commerce grew, a number of complaints and consultations from retailers and industry groups began to emerge illustrating that aggressive discounting, exclusive partnerships, and cash-back discounts adversely affected smaller sellers and distorted competition.
In response, the CCI implemented the 2025 Determination of Cost of Production Regulations allowing the assessment of predatory pricing on a case-by-case basis using enterprise-specific costing methodologies. The intent of this regulation is to distinguish between real competition and exclusionary behaviour and further assess any collusive agreements, exclusive arrangements or cash-back programs which do amplify the negative impacts of deep discounts.
Impact of Deep Discounts and Flash Sales: Market and Legal Analysis
- Effects on Market Competition
- Deep discounts and flash sales have erected higher barriers for smaller retailers who cannot compete with the scale and pricing power of platforms that are now fundamentally driven by technology.
- CAIT and other business surrogates vent their expressed collective engagement with interested parties about cash-burn strategies and exclusive alliances form fabricated monopolies that disrupt traditional retailing and eliminate the competition.
- Consumer Welfare
- While consumers benefit from lower pricing today, it is difficult to calculate what the long-term effect might be if competition continues to decline with reduced competition and higher pricing, poorer quality, and less variety once weaker competitors fail in the industry.
- Role of Foreign Direct Investment (FDI) Policy
- Changes in FDI policy prohibits exclusive sales arrangements and restricts platform cashback practices that purport to constrain the predatory behaviour used to deliver discounted everyday pricing previously funded by FDI exchanges.
- Judicial and CCI Precedent
Indian jurisprudence on predatory pricing in e-commerce has evolved through landmark CCI and court rulings. For example, in Ashish Ahuja v. Snapdeal, CCI Case No. 17 of 2014 (Order dated 19 May 2014), the CCI explained that discounting is not, in and of itself, anti-competitive unless the platform is a dominant player, but exclusive tie-ups, and persistent below-cost pricing to capture market share may merit scrutiny.
In Delhi Vyapar Mahasangh v. Flipkart, Amazon & Ors., 2020 SCC OnLine CCI 3, a significant event in this development, complaints against both Flipkart and Amazon were made on the basis that exclusive deal arrangements, as well as heavy discounting, with respect to smartphone sales, either on its own or combined, was foreclosing competition. A detailed probe was ordered, but stayed by the Karnataka High Court reflecting regulatory undertaking and subsequent judicial restraint.
In Vaibhav Mishra v. Sppin India Pvt. Ltd., Case No. 04 of 2021 (Order dated 25 April 2022) (Shopee Case), the CCI looked at extremely low pricing strategies (as low as Rs. 9). While predatory-charging intent was demonstrated, there was no charge due to the absence of dominant position, re-iterating the presence of a dominant position as a test under Section 4.
In MCX Stock Exchange v. National Stock Exchange, CCI Case No. 13/2010 (Order dated 23 June 2011), the CCI held that below-cost pricing in combination with exclusionary intent is an abuse of dominance, a much-reliable ruling that extends even beyond digital market cases.
Manipulative Practices: Dark Patterns and Hidden Charges
Many popular Indian e-commerce and digital platforms implement “dark patterns” to disorient consumers and create a complex process for cancelling a subscription, or unsubscribing from a service. In this case, e-commerce companies purposefully design and or layout user interfaces that require many steps, have unclear options, or use misleading language to cancel subscriptions or find hidden charges. Consumers attempting to unsubscribe from membership services like Zomato Gold, Amazon Prime, Zepto Pass, Blinkit, and others, will often find themselves clicking through several pages, finding buttons that are not easy to locate, and as well-being prodded repeatedly to confirm that they really want to leave, with attempts to persuade them back (like offers with discounts or consideration to change their mind about cancelling).
On top of this, many platforms use hidden fees on consumers and refer to some as platform fees or service fees (with some called rain or surge fees) or minimum order fees and typically the hidden fees are only known once the consumer reaches the last checkout screen or last mile upon placing an order. For example, Zepto and Blinkit faced backlash and scrutiny for the cash handling fees they charged, as well as their processing fees, and because they used forced fees/add ons which were not properly disclosed to users in advance. Amazon also recently faced a backlash for putting a marketplace fee (which Prime customers are also made to pay) at the last step before payment.
Recent Developments in Regulatory Norms
- The 2025 regulations allow CCI flexible and sector-agnostic tools, and reflect international best practices, which incentivize measurable cost assessments rather than market value or promotion spending.
- The changing policies emphasise case-by-case assessments, avoid blanket bans, and allows CCI to fit the nature of its interventions to the fast-paced developments in the digital trade space.
- Stakeholder feedback led to clarifying the difference between normal business competition and unfair exclusionary practices in fast-changing online markets.
Stakeholder Perspectives
- E-commerce companies feel that deep discounts initially build trust with a consumer for online marketplaces and that a price sensitive economy necessitates consistent deep discounts.
- Trade associations noted that sustained deep discounts and cash backs, particularly in future flash sales, create challenges for businesses operating through a traditional business model, and support for regulatory measures.
- CCI has always stated the need to ensure the abhorrence of dominance is curbed, while concurrently attempting to ensure consumers are protected and competition promoted.
Conclusion
Predatory pricing in India’s e-commerce environment exists within a complex and evolving context, representing a unique mix of regulation, business practice, and consumer welfare. As deep discounting and flash sales continue to disrupt established retail practices, the CCI’s open-ended cost criteria are a major signal of potential governance for obtaining competitive neutrality, fair play and sustainability in digital commerce. Legal practitioners, policymakers, and members of the digital economy ought to monitor changes in business models to understand how these transformations will impact market behaviour, consumer welfare and the health of India’s retail sector.
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WRITTEN BY Stuti Vineet
