Flipkart moves SC against CCI probe
The Karnataka HC last week dismissed cases filed by Flipkart and Amazon which sought to quash the CCI investigation
NEW DELHI: Walmart’s Flipkart has appealed in the Supreme Court against a high court decision that allowed an antitrust probe into the e-commerce firm and its rival Amazon.com Inc to continue, three sources told
Reuters on Tuesday.
The high court in Karnataka last week dismissed cases filed by Amazon and Flipkart which sought to quash the Competition Commission of India’s (CCI) 2020 investigation. The companies denied any wrongdoing, but the court said “they should not feel shy in facing an inquiry.”
On Tuesday, Flipkart filed an appeal in the Supreme Court, challenging that decision, three people familiar with the proceedings said.
Further details of the challenge, or Flipkart’s pleas, were not immediately clear. The Supreme Court website showed Flipkart had filed a case against the CCI and other parties, without giving more details.
Flipkart did not immediately respond to a request for comment. Amazon is also expected to file an appeal against the high court ruling, according to people familiar with the case.
The CCI investigation is the latest setback for Amazon and Flipkart, which are grappling with prospects of tougher e-commerce regulations and accusations from brick-andmortar retailers that the companies circumvent Indian law by creating complex business structures.
The companies face several allegations in the case, including exclusive launches of mobile phones, promotion of select sellers on their websites and deep discounting practices that drive out competition.
A division bench of the Karnataka high court on Friday dismissed an appeal by Flipkart and Amazon India to halt a probe by the country’s competition watchdog, dealing a significant setback to the two ecommerce platforms.
The order by the bench, comprising Justice Satish Chandra Sharma and Justice Nataraj Rangaswamy, comes after Walmart-owned Flipkart and Amazon India had appealed to the bench to overturn an earlier ruling that had paved the way for the CCI to probe both the online marketplaces.
Terming the appeals by Flipkart and Amazon India as “devoid of any merits and substance”, the bench said the ecommerce firms should not feel shy of the probe if they haven’t violated any antitrust laws.
Flipkart and Amazon India had filed separate appeals that were clubbed and heard together by the division bench.
Following the court order, people aware of the companies’ thinking said that both Flipkart and Amazon India are likely to approach the Supreme Court (SC) challenging the latest ruling. “It is safe to think the matter will now get challenged in the Supreme Court,” said a person aware of the development.
A representative for Amazon India said, “we respect the judgement passed by the honourable high court and we will review it in detail to determine next steps.”
Flipkart said it was yet to receive a copy of the order and will review it as soon as it gets the order.
“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,” a spokesperson for the Flipkart Group said.
CCI had ordered the probe against the two ecommerce marketplaces in January 2020, saying it had “prima facie” found evidence to begin an investigation under Section 26 (1) of the Competition Act, 2002.
Traders’ body welcomes order
This followed a series of allegations by trade bodies such as the Confederation of All India Traders (CAIT) and Delhi Vyapar Mahasangh (DVM) that Amazon India and Flipkart were offering deep discounts, which were predatory in nature, to customers as well as favourable terms to select sellers.
CAIT welcomed the HC order on Friday.
The investigation was ordered just days before Amazon founder Jeff Bezos landed in India on a business trip in 2020. In response, both etailers moved the Karnataka HC, which granted an interim stay into the probe in February 2020. CCI appealed against it in the Supreme Court in October, but the case was referred back to the high court.
CCI argued in the high court that it should be allowed to continue the probe and that an investigation did not mean the companies had been found guilty already.
Meanwhile, Amazon and Flipkart claimed that CCI did not possess enough prima facie evidence to order such an inquiry. CCI should have consulted the companies and allowed them to make their case before ordering a probe, they told the court.