Walmart-owned ecommerce marketplace Flipkart has filed a writ petition in the Karnataka High Court challenging an antitrust investigation into its alleged anti-competitive business practices.
Prior Facts:
Flipkart filed the petition on February 18, according to a report by Reuters, four days after the CCI’s order was stayed. The ecommerce company told the high court that the CCI’s order was “perverse (and) passed without any application of mind”, Reuters had reported. The move comes days after the same Court had stayed the Competition Commission of India’s (CCI) probe following a similar plea by rival Amazon. “We are a party to the CCI order and a respondent in Amazon’s writ against the order. Given this position and the High Court stay, as a procedural matter, we are also filing a writ,” a Flipkart spokesperson said in an email.
The Karnataka high court has temporarily upheld the arguments made by Amazon and Flipkart. The interim stay on the investigation gives a breather to Amazon and Flipkart amid intensifying scrutiny of e-commerce firms by Indian authorities.
Key Features:
- The CCI had ordered a probe into the two companies on January 13 after receiving complaints from a Delhi-based offline traders’ body alleging Amazon and Flipkart were engaging in anticompetitive activities including deep discounting, preferential treatment of sellers, promotion of private labels and exclusive partnerships with phone brands.
- The court on February 14 stayed the investigation after finding that the CCI did not have any evidence on record and also citing jurisdictional issues since there is an ongoing investigation into the two firms by the Enforcement Directorate (ED).
- The petitions by Amazon and Flipkart come just days ahead of US President Donald Trump’s visit to India. Ecommerce and India’s tightening norms around investment in the sector could be on the agenda during Trump’s visit.
- Both companies have in the past raised with the US government issues related to changes in India’s foreign direct investment rules.
- The High Court has already ordered a stay against the CCI order following an earlier petition filed by Amazon. Now, Flipkart has joined its key rival in challenging this investigation.
- CCI ordered the probe following complaints from offline traders. According to CCI, both these ecommerce companies had promoted and gave discounts to preferred sellers on its platform. Also, they entered into exclusive partnerships with smartphone brands and in the process, abused their dominant positions.
- Amazon and Flipkart have faced criticism from offline traders about the steep discounts they offer. They claimed that these e-commerce companies were deeply hurting their businesses.
- Flipkart has said that, that CCI cannot examine matters that directly fall under the Foreign Exchange Management Act, especially when the Enforcement Directorate is examining the same issues.
- The Flipkart in its petition stated that, “The order has directed an investigation without making a determination of existence of essential jurisdiction and in a pre-determined manner by treating allegations of abuse of dominance as an ‘anti-competitive’ agreement”.
- The Delhi Vyapar Mahasangh, a group representing small and medium businesses, in its complaint to CCI had alleged that e-commerce platforms were funding discounts that were having an adverse impact on small businesses.
- With CCI increasing scrutiny on internet businesses, Amazon and Flipkart, despite their rivalry, have set aside their differences to take on the regulator and trade bodies, and protect their individual interests.
Edited by J. Madonna Jephi
Approved & Published – Sakshi Raje
