It could be a bumpy ride ahead for online e-commerce companies in India, as litigation in this space could go up.
Legal experts and analysts say the latest Press Note 3 on foreign direct investment (FDI) guidelines issued by the department of industrial policy and promotion (DIPP) has left a lot for interpretation. Experts are seeing a rise in the number of cases where offline retailers, trade associations and even merchants of online marketplaces are going to the courts, asking for intervention of agencies such as Competition Commission of India (CCI) and the Enforcement Directorate (ED). In fact, companies are strengthening their legal departments in the backdrop of the current business environment, a sector representative said. “For instance, we are unclear about what the guidelines mean on indirectly influencing the price,” said a senior executive of an e-commerce company. One of the guidelines in Press Note 3 is that no e-commerce marketplace platform must directly or indirectly influence the price of products sold on the platform. This is turning out to be among the trickiest.