Flipkart moves HC against CCI investigation over deep-discounting, preferential listing of sellers

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Published: February 22, 2020 6:15:34 AM

Though the HC on February 14 had issued an interim stay order against the probe based on rival Amazon's plea, procedure demanded that Flipkart also file a petition as it is a respondent and party in the matter.

flipkart, ecommerceFlipkart said the CCI has also failed to assess the bona fides of the informant

Flipkart has filed a writ petition in the Karnataka High Court seeking a stay on the “operation, effect and implementation” of the Competition Commission of India’s (CCI) January order asking its director general to investigate Flipkart’s alleged business practice of deep-discounting, preferential listing of sellers and exclusive pacts.

Though the HC on February 14 had issued an interim stay order against the probe based on rival Amazon’s plea, procedure demanded that Flipkart also file a petition as it is a respondent and party in the matter.
Flipkart, in its February 18 petition, said there is more than a strong prima facie case that the impugned order is “ex facie illegal” and is liable to be set aside in as much as it “fails to meet the basic/essential jurisdictional prerequisites under section 26(1) of the Competition Act”. Section 26(1) of the Act establishes that there is a prima facie case for probing a matter.

Flipkart argued that by passing the impugned order, CCI has contradicted its own orders and precedents wherein it had dismissed similar allegations raised against the petitioner (Flipkart). Further, the company said the CCI had initiated a market study on e-commerce in India wherein it has repeatedly advocated a non-interventionist and self-regulation approach towards e-commerce players in the country. “It is respectfully submitted that the CCI cannot alter its stand from time to time,” the firm said in the petition.

“The High Court of Karnataka has issued an interim stay of the CCI investigation. We are a party to the CCI order and a respondent in Amazon’s writ against the order. Given this position and the High Court stay, as a procedural matter, we are also filing a writ,” a Flipkart spokesperson said.

On February 10, Amazon had filed a similar petition in the High Court stating that the findings established by the impugned order are “perverse, arbitrary, untenable in law”. On February 14, the High Court had stayed the CCI probe observing that the Enforcement Directorate (ED) has already initiated investigation into Amazon and Flipkart’s operational activities alleged to be in contravention of the FDI policy in e-commerce.

Flipkart while pointing out the ED investigation also singled out the alleged charge of exclusivity for online sale of smartphones stating that the decision to determine the manner, time and mode of smartphone launch rests solely with the phone manufacturer.

Following a plea by the Delhi Vyapar Mahasangh (DVM), the CCI in January had directed its DG to probe Amazon and Walmart-controlled Flipkart, stating 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”.

Flipkart said the CCI has also failed to assess the bona fides of the informant, adding that “CAIT (The Confederation of All India Traders) has indulged in forum shopping against the petitioner by approaching various judicial forums”.

It is submitted that globally and in India, the mere commencement of an anti-trust investigation against a company would have an adverse impact on its reputation, Flipkart said in the petition.

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