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Karnataka High Court dismisses Amazon, Flipkart plea against CCI antitrust probe

DVM alleged that Amazon India and Flipkart were giving preferential listing and deep discounting on products sold by these select vendors, which hurt small businesses in the country. (Reuters)Premium
DVM alleged that Amazon India and Flipkart were giving preferential listing and deep discounting on products sold by these select vendors, which hurt small businesses in the country. (Reuters)

  • The Karnataka high court on Friday dismissed Amazon and Flipkart’s writ petitions challenging the probe ordered by the Competition Commission of India (CCI) against their business practices

BENGALURU : The Karnataka high court on Friday dismissed Amazon and Flipkart’s writ petitions challenging the probe ordered by the Competition Commission of India (CCI) against their business practices.

“It is expected that an order directing investigation be supported by ‘some reasoning’, which the commission has fulfilled. Therefore, it would be unwise to prejudge the issues raised by the petitioners in these writ petitions at this stage and scuttle the investigation," ruled Justice P.S. Dinesh Kumar who heard the writ petitions moved by both Amazon and Flipkart.

“Therefore, the impugned order does not call for any interference [...] Resultantly, these writ petitions must fail. Accordingly, the rule is discharged and writ petitions stand dismissed," said the court order passed on 11 June. Mint has seen a copy of the court order.

Flipkart and Amazon India are expected to challenge the order, according to two individuals who spoke on condition of anonymity.

“There are gaps in the judgement, which gives credence to appeal. For allegations that pertain to the market for ‘smartphones sold on online marketplaces in India’, the commission has ignored the fact that online marketplaces do not exercise control over the inventory or distribution of these smartphones and, therefore, cannot be considered part of the supply chain for the sale of these smartphones," said one of the individuals mentioned above.

In 2019, the Delhi Vyapar Mahasangh (DVM), a group of owners of several micro, small and medium enterprises, submitted a plea with CCI against Flipkart and Amazon for abusing their market dominance and giving preferential listing and deep discounting on products sold by select vendors in which they control indirect stakes. This hurts small business in the country, it contended.

Based on the information received from DVM, CCI directed the director general of CCI to launch a probe in January 2020 for alleged violation of Section 3 of the Competition Act.

Amazon India and Flipkart then moved Karnataka high court in February 2020, which granted both companies an interim stay on the CCI probe. By October 2020, CCI challenged the interim order at the Supreme Court. However, the commission’s appeal was referred back to Karnataka high court.

“We will review the judgement carefully and decide on the next steps," Amazon India said in reply to Mint’s queries.

Madhavi Diwan, additional solicitor general for the commission, S. Gautamaditya, advocate for Delhi Vyapar Mahasangh, and Abhir Roy, advocate for the Confederation Of All India Traders argued against the writ petitions by the two e-commerce companies.

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