SHOULDN’T BE AFRAID OF CCI PROBE: HC TO AMAZON, FLIPKART

Court rejects e-commerce firms’ plea challenging investigation for alleged competition law violations

The Karnataka High Court on Friday upheld a Single Judge order dismissing the pleas filed by Amazon and Flipkart against an investigation initiated by the Competition Commission of India (CCI) for alleged competition law violations. A division bench of Justices Satish Chandra Sharma and Natraj Rangaswamy passed the order in a batch of appeals moved by the e-commerce firms against the June 11 order of a Single Judge of the High Court.

The Karnataka High Court on Friday upheld a Single Judge order dismissing the pleas filed by Amazon and Flipkart against an investigation initiated by the Competition Commission of India (CCI) for alleged competition law violations.

A division bench of Justices Satish Chandra Sharma and Natraj Rangaswamy passed the order in a batch of appeals moved by the e-commerce firms against the June 11 order of a Single Judge of the High Court.

While dismissing the plea, the Bench held, “By no stretch of imagination can inquiry be quashed at this stage... Appellants should not be afraid of investigation of CCI... In the considered opinion of the Court, appeals filed by appellants are devoid of merit and deserved to be dismissed…,” according to law platform Bar and Bench. The matter was reserved for judgment on June 25.

Amazon had approached the Karnataka High Court against a CCI order that had called for a director general (DG) investigation into allegations of anti-competitive conduct in the online sale of smartphones on its platform.

The informant before the CCI, Delhi Vyapar Mahasangh (DVM), a traders’ body, had justified the CCI decision for an investigation. DVM had alleged that these e-commerce players were giving deep discounts on online sales of smartphones, and cherry-picking sellers. Other allegations included predatory pricing and exclusive partnerships.

Experts such as Salman Waris, managing partner at technology law firm Techlegis Advocates and Solicitors, said the court’s decision has further reinforced the position of the petitioners that the CCI investigation should continue. “However, there is a likelihood that Amazon and Flipkart will appeal the decision in the Supreme Court,” Waris said.

Walmart-owned Flipkart said it is waiting to receive a copy of the order of the Division Bench of the Karnataka High Court, and will review it as soon as it gets it. “As highlighted earlier, we have a very robust compliance and governance process and remain in full compliance with Indian laws. We will do everything to be always compliant,” said a Flipkart spokesperson.

DVM is an affiliate of the trade body Confederation of All India Traders (CAIT), which, too, welcomed the court order. “It fully vindicates the stand of CAIT that the Amazon and Flipkart business model is entirely based on violating the FDI (foreign direct investment) policy, rules and other laws. So, without wasting any more time, the CCI should immediately begin its probe,” said B C Bhartia, national president, CAIT. The confederation’s secretarygeneral, Praveen Khandelwal, echoed Bhartia’s sentiment. CAIT was represented by advocate Gautam Aditya and DVM by advocate Abir Roy.

CAIT said that the CCI had in January 2020 found a prima facie case for investigation against Amazon and Flipkart for violating competition law and distorting the level playing field.

Amazon and Flipkart had approached the Karnataka High Court in February 2020 and obtained a stay on the probe. The CCI then went to the Supreme Court, which directed the Karnataka High Court to hear the matter. Thereafter, the matter was heard for nearly 40 days by a Single Judge Bench of the Karnataka High Court, which finally quashed the plea by Amazon and Flipkart. The e-tailers then challenged the order before the Double Bench of the Karnataka High Court.

Welcoming the court’s decision, Bhartia and Khandelwal of CAIT said that foreign companies, particularly in the e-commerce space, had been “violating the law and policies, bringing many disadvantages to the small traders of the country”.