India’s booming quick commerce sector led by Blinkit (owned by Zomato), Swiggy Instamart, and Zepto, may come under regulatory scrutiny as a key FMCG distributors’ body has moved to the Competition Commission of India (CCI). The All India Consumer Products Distributors Federation (AICPDF) has filed an antitrust petition, alleging that these platforms are engaging in predatory pricing and deep discounting, which could significantly disrupt the traditional retail ecosystem.

Sources familiar with the matter revealed that the petition urged the CCI to direct its Director General (Investigation) to conduct a probe into the business practices of quick commerce firms. The federation has claimed that these platforms, backed by venture capital funding and foreign direct investments, are deliberately operating at losses to expand aggressively and capture market share at the cost of traditional distributors and retailers.

Predatory pricing

The AICPDF has alleged that quick commerce firms are selling products below their cost price, making it nearly impossible for small retailers to compete. Many mom-and-pop stores and traditional distributors, unable to match the heavy discounts offered by these platforms, are either shutting down or suffering substantial financial losses.

By resorting to such pricing strategies, quick commerce platforms are not just disrupting the market but actively driving competitors out of business, the petition argued. The federation believes this could lead to monopolistic practices in the future, where a few large players dominate the sector, leaving small retailers and distributors with no viable business model.

Moreover, the petition highlighted that these platforms often introduce special discounts for new users, further distorting market competition. “Some of the introductory offers are in the nature of predatory pricing,” the AICPDF has alleged, indicating that such strategies create an unfair playing field for traditional market participants.

Discriminatory practice

AICPDF has also raised concerns about the role of major fast-moving consumer goods (FMCG) companies in enabling quick commerce firms to dominate the market. The petition alleged that FMCG brands offer bulk discounts and preferential pricing to quick commerce firms, putting traditional retailers at a disadvantage.

The discriminatory prices provided by FMCG companies to quick commerce platforms have led to anti-competitive practices downstream in the retail market, according to the petition.This preferential treatment, according to AICPDF, creates an artificial cost advantage for quick commerce firms, making it even harder for small businesses to sustain themselves.

Regulatory push

The petition also refers to the recommendations of the Standing Committee on Finance, which has emphasised the need for proactive regulatory oversight in the digital economy. The committee has suggested that competition authorities should intervene early in emerging digital markets rather than relying on post-facto evaluations once monopolistic trends are already established.

Following these recommendations, the AICPDF argued that it is now the CCI’s responsibility to investigate the alleged anti-competitive behaviour of quick commerce firms and ensure that the market remains fair and competitive for all players.

Impact on traditional retail

The rapid rise of quick commerce has already begun reshaping India’s retail landscape. These platforms, which promise deliveries within minutes from hyperlocal warehouses, have gained immense popularity among urban consumers who prioritise convenience. However, this shift has also had a significant impact on local kirana stores and traditional retailers, many of which rely on daily walk-in customers and conventional distribution networks.

A report by Bernstein estimates that India’s quick commerce market, which stood at just $200 million in 2021, is projected to grow to a massive $35 billion by 2030. This exponential growth, if left unchecked, could push a significant portion of India’s small retailers out of business, the AICPDF has warned.

A report by Elara Capital stated, AICPDF has demanded a Minimum Support Price on Maximum Retail price citing adverse impact on kirana stores in tier-1 cities. “As per checks, AICPDF has demanded a 10 per cent floor on MRP for FMCG products, a 2-3 per cent floor on MRP for non-FMCG, and control on e-Commerce & quick commerce platforms’ offers & discounts through regulations. Execution of these demands is highly unlikely, given that globally, there is no MSP concept for FMCG products, floor to price may retard investment in eCommerce & start-up activities, and it is counter-intuitive to containing inflation,” Karan Taurani, Senior Vice-President, Elara Capital stated in the report.

With the petition now before the CCI, the regulatory body will have to decide whether to take up the matter and launch a formal investigation. If the CCI finds merit in the allegations, it could impose penalties or issue corrective measures to curb anti-competitive practices, economy watchers said.