The government has decided to ban e-commerce companies from selling products from companies in which they have an equity interest, according to media reports. The decision has been taken by the commerce ministry and will come into effect on February 1.
The reports mention that it has also been decided that the companies will be prevented from entering into exclusive agreements with sellers.
"An entity having equity participation by e-commerce marketplace entity or its group companies, or having control on its inventory by e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such marketplace entity," the commerce ministry was quoted as stating in a statement.
The notification also reportedly says that the cashback that customers get should not be based on whether the product was purchased from an affiliate of the platform or not.
The new regulations have been formulated after retailers and traders complained that the giant e-commerce companies are using their association with their affiliates to forge agreements with them and so are able to sell products at very low prices. A complaint in this regard was filed by the All India Online Vendors Association in October with Competition Commission of India.
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