By LE Desk
Bengaluru, June 12, 2021: The Karnataka High Court rejected a petition by Amazon India and Walmart-owned Flipkart that sought to quash an investigation by the Competition Commission of India (CCI) into their business practices.
The decision by Justice PS Dinesh Kumar on Friday cleared the way for the antitrust regulator to restart its investigation into the e-commerce companies.
The court rejected Flipkart’s plea for an extension of the interim stay on the probe for another two weeks. Flipkart and Amazon India will likely challenge the order, said people with knowledge of the matter. They have 30 days to appeal, The Economic Times reported.
CCI had ordered a probe against the two companies last January, saying it had “prima facie” evidence to begin an investigation under Section 26 (1) of the Competition Act, 2002. This followed allegations by trade bodies such as the Confederation of All India Traders (CAIT) and Delhi Vyapar Mahasangh (DVM) that Amazon India and Flipkart were offering deep discounts to customers that were predatory in nature and favourable terms to select sellers.
An Amazon India spokesperson said it will “review the judgement carefully and decide on the next steps.” Flipkart declined to comment.
“It fully vindicates the stand of CAIT–that Amazon’s and Flipkart’s business model is entirely based on violating the FDI policy, rules and other laws,” said CAIT secretary general Praveen Khandelwal. “CCI should begin its probe immediately.”
The probe was originally ordered just days before Amazon founder Jeff Bezos arrived in India on a business trip in 2020.
The two companies moved the Karnataka High Court, which granted an interim stay into the probe in February 2020. CCI moved the Supreme Court in October but the case was referred back to the high court.
CCI argued in the high court hearings that it should be allowed to continue and that a probe didn’t mean the companies have been found guilty of the allegations already. Amazon and Flipkart said CCI didn’t have enough prima facie evidence to order such an inquiry. They said the regulator should have consulted the companies and allowed them to make their case before ordering a probe. According to competition law experts, an order under Section 26(1) is based on prima facie evidence and the law doesn’t mandate a hearing before it’s passed, reported The Economic Times.
Amazon had termed CCI’s move “perverse, arbitrary and untenable in law” and that it would be abuse of power if the regulator was allowed to conduct the probe. CCI had told the court last year that Amazon’s arguments were “mischievous.”