India Lawsuit Against Flipkart Highlights Discounting Concerns

Walmart, it seems, has found itself drawn into a legal struggle between its recent acquisition Flipkart and GOQii — an Indian maker of smartwatchesque health devices — over pricing.

GOQii alleges in its suit against Flipkart filed last month that Flipkart has been selling their wearable devices at 70 percent discount from the retail price, much more than the two sides had agreed to. Flipkart, for its part, has denied any wrongdoing, noting that the discounts were put into place by third-party sellers on their marketplace.  The case will next be heard on Friday.

The spat has exposed a long-running dispute within in the Indian commerce landscape — and concerns that firms Flipkart and Amazon use their power to loss-lead to lure consumers to their sites in the hopes they will buy other items while they are shopping there.

“It will set a precedent if the final decision goes against Flipkart for predatory pricing,” said Salman Waris, a partner at TechLegis Advocates & Solicitors. “Small traders’ associations and other startups may take other marketplaces adopting deep discounting strategy to court.”

And GOQii looks like it will soon have partners in litigation. The All-India Online Vendors Association said in a statement released to Reuters that it plans to file a plea to join GOQii’s case against Flipkart.  It note it is doing this on behalf of the over 3,500 merchants on its marketplace.

Flipkart, for its part, noted it takes legal compliance seriously and was compliant with Indian law.

“We are engaged with the supplier to come to a swift resolution,” it said.

With a 19 percent market share, GOQii was the second-biggest player in India’s so-called wearables market last year, data from industry tracker IDC showed in December. The market leader remains China’s Xiaomi, with Samsung a small player.