Covid impact on what we may call a relevant market

News– All-India Mobile Retailers’ Association recently threatened to approach the Competition Commission of India (CCI) against Chinese phone-maker Xiaomi’s alleged bias in favour of online marketplaces over offline retailers. 

Recently Supreme court allowed CCI to go ahead with an investigation against e-commerce players Flipkart and Amazon. 

In all these cases terms like Relevant market, dominant position occurs recurrently. India’s Competition Act, 2002 defines these terms. Though the act provides a definition of relevant market but question is whether our online and offline markets constitute a single relevant market. Rulings by Indian courts have not been consistent in this aspect. Even though courts increasingly favoured the view that online and offline markets fall in the same relevant market, there have been contrary views. 

Offline versus Online market ,advantages to the latter? 

1) Online retailers have significantly lower customer-reach costs than offline retailers. 

2)Offline retailers bear the costs of setting up a warehouse, transporting products there, and so on, while online retailers can serve customers across a large area with a single warehouse. 

3)Transportation costs of products are often passed on to end customers. Savings on these allow online retailers to sell customers the same products at lower prices. 

4)Internet retail services lower the transportation costs of customers, allow quick and convenient product searches, offer a variety of products in a range of price brackets, and provide detailed product information that is often not available at regular retail stores. 

Conclusion-COVID pandemic has altered shopping circumstances, attitudes and habits over the past 20 months or so, with an increased number of retail consumers now relying on online purchases for reasons that go beyond price differences ,it is imperative that the case for the definition of relevant market is settled. 

Source– This post is based on the article “Covid impact on what we may call a relevant market” published in Livemint on 9 th Dec 2021.