An Indian antitrust regulator has found that Amazon and Flipkart, owned by Walmart, violated local competition laws, according to a report from Reuters. The finding presents a new challenge for the e-commerce giants in a market where online retail growth remains modest at under 15% and quick-commerce is increasingly snatching business from Amazon India and Flipkart.

The Competition Commission of India (CCI) launched a probe into Flipkart and Amazon India in 2020 following claims that these companies favored specific vendors and prioritized certain product listings. The investigation concluded that both firms had engineered systems where preferred sellers gained advantageous positioning in search results, thereby disadvantaging other merchants.

“Each of the anti-competitive practices alleged … were investigated and found to be true,” Reuters reported, citing the confidential reports. “Ordinary sellers remained as mere database entries.”

The inquiry, initiated by a consortium of physical store owners, revealed that favored sellers benefited from preferential listing placement and received services at nominal fees, the report said. Investigators noted that these practices, particularly in the mobile phone sector, including preferential listings and significant price reductions, had a “catastrophic impact” on fair market competition.

Amazon declined to comment.

Flipkart and Amazon India lead the e-commerce market in the world’s most populous nation. The e-commerce firms clocked sales of about $50 billion to $60 billion last year, according to industry estimates. The two firms have poured over $25 billion into building the railroads for e-commerce in India.

Though the growth of e-commerce remains modest in India, quick commerce firms are increasingly eating into their market share. Quick commerce firms — including BlinkIt, Zepto, Swiggy’s Instamart, and BigBasket’s BB Now, are on track to do an annual GMV of more than $6 billion, according to TechCrunch’s estimates.