MAJOR CHANGES! E-commerce marketplace entity shall not sell any goods owned or controlled by it

In major changes to e-commerce rules, the Ministry of Consumer Affairs has specified that an e-commerce marketplace entity shall not sell any goods owned or controlled by it on such e-commerce marketplace platform. All the sellers on the platform shall only be third party sellers, and no e-commerce store can be run on the e-commerce marketplace platform.

These changes come in the Consumer Protection (E-Commerce) Rules, 2020 and the government has sought comments on it.

 

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The changes in rules to be notified will cut on complaints of discounts, and sales by related parties by foreign e-commerce majors.

An e-commerce marketplace entity means an e-commerce entity, which provides an information technology platform on a digital or electronic network to facilitate transactions between buyers and sellers.

In addition, the changes in rules now prescribe that no e-commerce entity shall discriminate between consumers of the same class or make any arbitrary classification of consumers affecting their rights under the Act. No e-commerce entity shall make any segmented offers to particular consumers on an arbitrary basis. The classification of consumers shall be on a transparent and objective basis and offerings shall be uniform across a class of consumers.

An entity will not use information collected by marketplace e-commerce entities, for sale of goods, directly or indirectly, by any seller, whether related or not.

The e-commerce marketplace entity or its associated enterprises or its related parties cannot directly or indirectly license its brand or private label products to third parties to be sold on the platform.

If an e-commerce entity is operating an e-commerce marketplace platform as well as an e-commerce store platform, the two platforms cannot use the same or similar brand name or branding.

The entity will give total price in single figure of any good or service, along with the breakup showing all the compulsory and voluntary charges such as delivery charges, postage and handling charges, conveyance charges and the applicable tax, as applicable. This shall also be made available transparently in a tabular form when a consumer is comparing various products.

Every marketplace e-commerce entity shall publish on its website the charges payable by sellers for selling their goods on the platform and any other services provided by the e-commerce marketplace entity. All information, including its terms and conditions generally governing its relationship with sellers, shall be displayed on its platform.

Categorisation, if any, of sellers shall be on a transparent basis. All offers or discounts or relaxations in terms and conditions to various categories of sellers shall be uniform for all the sellers in a given category. Such categorisation as well as provision of discounts or offers should not be arbitrary to the advantage of select sellers.

Every e-commerce marketplace entity shall provide API based access to all logistics service providers in a non-discriminatory manner. Sellers should be free to choose the logistics service providers. No logistics service provider of a marketplace e-commerce entity shall provide differentiated treatment between sellers of the same category.

The delivery charges charged by the logistics service provider shall be transparently published. Any discount or relaxation in terms and conditions which are given to certain categories of sellers should be uniformly applicable to clearly defined categories of sellers and should not be arbitrary. Such terms for discounts and relaxation in charges shall also be published.

If related party or associated enterprise is providing logistics services, any discrimination, waiver or under-charging of delivery charges shall be treated as discount to the selling price provided by the platform which is not permissible.

Two enterprises shall be deemed to be associated enterprises, if they are covered by the definition of associated enterprise in section 92A of Income Tax Act.

Also, if they are affiliates; where 'affiliate' means, with respect to any person, any other person who, directly or indirectly controls, is controlled by or is under common control with such person, where one enterprise provides loans or guarantees to the other enterprise; where one enterprise holds direct or indirect economic participation through equity or otherwise.

No marketplace e-commerce entity shall sell goods or services, directly or indirectly, to any person who is registered as seller on its platform.

No marketplace e-commerce entity or logistics service provider shall make any offers to a consumer or a class of consumer that is not uniformly applicable across all the sellers on the platform.

If a marketplace e-commerce entity is offering any discounts or incentives to consumers or sellers to promote itself, it must give such discounts on a non-discriminatory basis across all consumers or sellers, as the case may be.

To ensure transparency and prevent cross-subsidisation, no marketplace e-commerce entity shall be allowed to collect bundled fees from consumers for (i) the services provided with respect to the ecommerce platform and (ii) any other service that is not related to ecommerce platform provided by the e-commerce entity or its related parties or associate enterprise.

E-commerce marketplace entity shall enable all payment options as authorised by Reserve Bank of India, and provide API for easy integration with all the payment platforms on a non-discriminatory basis. Sellers shall be able to select the preferred payment service provider.