Online vendors move against Flipkart; NCLAT to hear plea against CCI ruling favouring Walmart firm

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Updated: May 21, 2019 5:06:31 PM

AIOVA has been alledging Flipkart's abuse of its dominant position in the e-commerce market favouring select sellers. The hearing in the matter is scheduled for July 30. Against Amazon, the association "will fight separately."

The CCI had on November 6 passed the order absolving Flipkart and Amazon that their businesses don’t violate competition norms. (Image: Reuters)

The National Company Law Tribunal (NCLAT) has admitted the petition submitted by the online vendors’ body All India Online Vendors Association (AIOVA) against the Competition Commission of India’s order in November last year that was ruled in favour of Flipkart. AIOVA has been alledging Flipkart’s abuse of its dominant position in the e-commerce market favouring select sellers. The hearing in the matter is scheduled for July 30, said AIOVA’s counsel Chanakya Basa told Financial Express Online.

“We have submitted enough evidence that Flipkart is a dominant player in the e-commerce market. The factors include vertical integration by Flipkart which means how much of its entities are there in upstream and downstream. Flipkart is a manufacturer in terms of its brands Billion, Smartbuy etc., and it is also a wholesale player through Flipkart India Pvt Ltd. It is also a platform with Flipkart.com — a part of Flipkart Internet Pvt Ltd.,” said Basa.

So they manufacture, they control the wholesale, they already have the platform along with the logistics. Now they also have the payment gateway. So they control the entire upstream and downstream that is one of the factors for evaluating dominance, he added.

Other factors include the economies of scale that means how much cash is invested and how much is the burn rate. This also becomes the entry barriers, said Basa.

“The appeal is admitted for hearing. As the respondents have appeared, no further notice need be issued,” PTI reported citing the National Company Law Tribunal as saying in its order on May 15.

Comments from Flipkart will be updated as and when received.

The CCI had on November 6 passed the order absolving Flipkart and Amazon that their businesses don’t violate competition norms. CCI refuted AIOVA’s charges of abuse of market dominance.

As of now, the case is only against Flipkart even as Amazon was added as a party by CCI. “Amazon we have to fight separately. Seeing CCIs conduct we have delayed it. They (CCI) have wrongly included Amazon in this case without any intimation to us,” said an AIOVA spokesperson.

“It does not appear that any one player in the market is commanding any dominant position at this stage of evolution of the market,” CCI had said with respect to Section 4 of the Competition Act that pertains to the unfair use of a market-leading position.

The commission further said that Flipkart marketplace is required to adhere to conditions applicable to entities involved in the business of e-commerce, as per the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017.

In case, the outcome is not positive from hearing with NCLAT then “we might go to Supreme court. This we will decide once the order is out but we are hopeful of the desired outcome,” said Basa.

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