The Karnataka High Court, in its interim order, has temporarily upheld arguments of ecommerce platforms questioning the jurisdiction of India’s antitrust regulator to conduct the investigation that it had announced in January.
Amazon’s India unit filed a writ petition in the Karnataka HC earlier this month seeking a stay on the probe ordered by the country’s antitrust regulator, Competition Commission of India (CCI) on 14 January against the company for alleged violations of competition law.
In the interim order, the judge ruled in favour of arguments made by Amazon that it comes under Foreign Exchange Management Act (FEMA) and any violation under this would be liable for penalty and not under the CCI.
“Should there be any violation of FEMA Act, Rule or Regulation, petitioner shall be liable for penalty under Section 13 of the FEMA Act. Since the matter is already seized before the Central Government to investigate into violation of FEMA, keeping in view the law laid down in Bharti Airtel Limited and Steel Authority of India cases, the CCI ought to have issued notice to the petitioner to explain it’s stance and awaited outcome of such investigation by the Central Government," the order reads.
CCI, the Delhi Vyapar Mahasangh (DVM), a group of small and medium businesses and Confederation of All India Traders (CAIT) had pointed out to exclusive partnerships between ecommerce platforms and smartphone makers, among other charges including deep discounting and preferred sellers, that had a bearing on competition.
“We are trying to distinguish ourselves from the Bharti Airtel Case," said one person directly involved in the case, requesting not to be named.
The stay on the investigation giving a breather to Amazon and Flipkart amid intensifying scrutiny of e-commerce companies by Indian authorities.
The court has concurred with arguments presented by Amazon and Flipkart citing telecom major Bharti Airtel Limited case.
“In view of penal provision under the FEMA Act and undertaking given by the Union of
India, in the opinion of this Court, ratio of Bharti Airtel Limited is applicable to the case on hand with regard to jurisdictional facts," the court noted.
However, the court said that no definitive opinion can be expressed at allegations of legal malice made by Amazon’s counsels that complainant has been set up by CAIT and the inference that it had joined hands with the complainant (DVM).
All parties have at least eight weeks to file their appeal and objections.