CCI investigation: Amazon moves HC for stay on probe on business practices

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Published: February 11, 2020 2:45:54 AM

Amazon on Monday moved the Karnataka High Court seeking a stay on the Competition Commission of India’s (CCI) order last month asking its director-general to investigate allegations that the e-commerce giant’s business practices entail ‘deep discounting, exclusive arrangements and preferential listing of sellers’.

Amazon, Amazon holiday sales, e-commerce, Amazon Web Services, Whole Foods Market, CORONAVIRUS, Amazon revenueThe CCI investigation would also cause “irreparable loss and injury” to the company and its reputation. (Reuters photo)

Amazon on Monday moved the Karnataka High Court seeking a stay on the Competition Commission of India’s (CCI) order last month asking its director-general to investigate allegations that the e-commerce giant’s business practices entail ‘deep discounting, exclusive arrangements and preferential listing of sellers’. In its petition, which was reviewed by FE, Amazon said: “…the present impugned order has been passed without prima facie application of mind and will cause serious prejudice to the petitioner. Its findings are perverse, arbitrary, untenable in law”. It said an interim stay on the proceedings directed by CCI should be granted as “the balance of convenience for the stay lies in favour of the petitioner as a bona fide company”. The CCI investigation would also cause “irreparable loss and injury” to the company and its reputation.

Further, “no harm or injury would be caused to the Respondent no. 1 (CCI) if a stay is granted,” Amazon said.
Amazon’s petition is likely to come up for hearing on Tuesday or Wednesday. Following a plea by Delhi Vyapar Mahasangh (DVM), CCI in January had directed its director-general to investigate Amazon and Flipkart over alleged charges of deep discounting, exclusive arrangements and preferential listing of sellers. Amazon refused to comment on the matter as the subject is sub judice.

In its order the CCI had stated that “..it needs to be investigated whether the alleged exclusive arrangements, deep-discounting and preferential listing by the Ops (opposite parties—Flipkart and Amazon) are being used as an exclusionary tactic to foreclose competition”. Amazon and Walmart-controlled Flipkart together command close to 80% market share in the country’s e-commerce sector, according to analysts. Traders have been lodging country-wide protests against Amazon and Flipkart over predatory pricing. They also claim that the deep-pocketed firms have been flouting the foreign direct investment (FDI) norms for the e-commerce sector laid down by the government. More than 5 lakh traders under the aegis of CAIT (Confederation of All India Traders) had last month held protests across 300 cities to showcase their opposition to Amazon founder and CEO Jeff Bezos’ India visit.

Praveen Khandelwal, secretary-general at CAIT said since a caveat was already filed by DVM in the Karnataka High Court in anticipation of such a move by either Amazon or Flipkart, the court will have to give a hearing to DVM before passing any order on the matter. “Amazon claims that it follows the FDI policy, then why they are opposing the investigation?” Khandelwal asked. A year back the government had revised its FDI norms for the e-commerce sector which bar online firms having foreign investment, like Flipkart and Amazon, from selling products of the entities in which they hold stake or whose inventory they control. It disallowed them from asking a seller to sell any product exclusively on their platforms. Separately, the government is also in the process of devising an e-commerce policy to create a level-playing field between online and offline players.

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