For consumer, a bad bargain

Context: Proposed e-commerce rules seek to shield traditional brick-and-mortar stores and handicap e-commerce firms, especially foreign ones.

Issues with the recent e-commerce rules

• Fall-back liability clause:
  • Under this provision, e-commerce entities will be liable in case suppliers on the platform fail to deliver the goods to consumers, causing them a loss.
  • As FDI is permitted only in the marketplace model (and no inventory model)— under this framework, e-commerce platforms don’t hold inventory but simply connect buyers and sellers, considering that these platforms exercise little or no control over the inventory under this model, they should not be held liable for the sellers' actions.
• Impact on consumers:
  • There is considerable ambiguity over the new rules, which mandate that none of the platform’s related parties can sell directly to the consumer through the platform. 
  • Curbs on related parties or flash sales adversely impact both consumer choice and price.
  • Moreover, the focus is on the promotion of domestic (through identification of country of origin), and thus the Make in India is being pushed through the Consumer Protection Act (1986).
• Issues of overlapping/competing jurisdictions:
  • The draft rules have sought to safeguard consumer data by restraining e-commerce firms, but the data protection should be governed under the provisions of the Personal Data Protection Bill.
  • Rules also state that e-commerce entities are prohibited from abusing their dominant positions in the market, which has the same meaning as under Section 4 of the Competition Act, 2002.

Way Forward

• Go for case by case determination of preferential treatment: The Competition Commission of India (CCI) had called for a more considered approach in its market study on e-commerce.
  • It argued for a case-by-case determination; not to straitjacket the regulatory architecture that governs e-commerce platforms, especially the foreign-owned ones, as the draft rules seek to do.