CCI investigation: Flipkart, Amazon challenge Karnataka High Court order before division bench

By: |
June 18, 2021 3:15 AM

In September 2020, the CCI filed an appeal in the Supreme Court against the interim stay order issued by the Karnataka High Court, following which fresh hearing in the case started in the High Court.

The case, which dates back to January 2020, saw several hearings and submissions made by the parties concerned before the single judge dismissed the plea of the two e-commerce players last week, giving CCI the go-ahead to launch a probe against them.The case, which dates back to January 2020, saw several hearings and submissions made by the parties concerned before the single judge dismissed the plea of the two e-commerce players last week, giving CCI the go-ahead to launch a probe against them.

Flipkart and Amazon have moved the division bench of the Karnataka High Court challenging the order of its single judge which allowed the Competition Commission of India (CCI) to conduct an investigation into allegations that the e-commerce majors indulged in anti-competitive practices, predatory pricing and accorded preferential treatment to some sellers.

“Flipkart filed its petition on Wednesday, while Amazon filed it on Thursday. Both are separate appeals. The bench is likely to take up the matter on Friday,” a source aware of the development told FE.

Flipkart and Amazon did not comment.

The case, which dates back to January 2020, saw several hearings and submissions made by the parties concerned before the single judge dismissed the plea of the two e-commerce players last week, giving CCI the go-ahead to launch a probe against them.

“….irreparable injury will be caused to the appellant if the investigation was to continue pending the present appeal, as (i) it would render the appeal infructuous, and (ii) subjecting an entity to an intrusive investigation by the DG in itself causes prejudice,” Flipkart said in its appeal. “The Ld single judge failed to appreciate that the Information filed before the CCI was a gross abuse of judicial process, as the informant has indulged in forum shopping and approached the CCI with unclean hands….The Ld single judge has failed to appreciate that the informant before the CCI had failed to disclose to the CCI that it was sponsored by CAIT (Confederation of All India Traders), it was a member of CAIT and that CAIT had indulged in forum shopping against the appellant by approaching various judicial forums..,” Flikpart said in its petition.

Following a plea by the DVM (Delhi Vyapar Mahasangh), the CCI in January 2020 had directed its director general 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”. Amazon had then said the CCI order was passed without “prima facie application of mind”, and terming its findings “perverse, arbitrary, untenable in law”, had filed a writ petition in the Karnataka High Court seeking a stay on the investigation.

In February 2020, the Court had stayed the CCI investigation on the ground that the Enforcement Directorate (ED) had already initiated investigation into the two firms’ operational activities alleged to be in contravention of the FDI (foreign direct investment) policy in e-commerce. In September 2020, the CCI filed an appeal in the Supreme Court against the interim stay order issued by the Karnataka High Court, following which fresh hearing in the case started in the High Court.

“The Ld single judge failed to consider that an allegation of deep discounting to “preferred” sellers cannot survive, where there are no connected parties selling on the online marketplace platform. Further, where goods are not being supplied at a “deep discount” in the first place, the question of an unfair advantage to a seller or a group of sellers by selective “deep discounting” cannot arise,” Flipkart said in its petition.

CAIT in a statement said that both these companies want to evade investigation and therefore have approached the court again. “The speed at which they have rushed to court to file an appeal itself shows their involvement in illegal and malafide practices causing harm to small merchants and the indian economy,” the association said.

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