Karnataka High Court junks Amazon, Flipkart plea against CCI probe

Bengaluru: The Karnataka High Court on Friday dismissed a plea by Amazon and Flipkart against a probe initiated by the Competition Commission of India (CCI) for the alleged violation of competition law.

A division bench comprising justices Satish Chandra Sharma and Natraj Rangaswamy passed the order on a batch of appeals moved by the e-commerce companies challenging a June 11 order passed by a single judge of the high court.

The high court bench noted that by no stretch of imagination the inquiry can be quashed at this stage and the appellants shouldn't be afraid of investigation by CCI. The bench said: "In the considered opinion of the court, appeals filed by appellants are devoid of merit and deserved to be dismissed..."

Amazon had moved Karnataka High Court against the CCI order which had called for a director general (DG)-level investigation into allegations of anti-competitive conduct in the online sale of smartphones on its platform.

Delhi Vyapar Mahasangh (DVM), the informant before the CCI, had alleged predatory pricing, deep discounting, preferential seller listing, and exclusive partnerships, among others, against Amazon and Flipkart.

The high court had reserved the judgment on the matter on June 25.

Justice P.S. Dinesh Kumar, on June 11, had dismissed the petitions filed by Amazon and Flipkart. DVM comprises traders from many micro, small and medium enterprises, and rely on trade of smartphones and related accessories.

Additional Solicitor General (ASG) Madhavi Divan, representing the CCI, contended that due to search bias on the respective platforms, they are pushing up certain sellers and the visibility for all sellers is supposed to be the same.

She emphasized that the essence of the competition act is to eliminate anti-competition elements, and "if there is nothing to hide, then there is no reason to scuttle the investigation".

During the hearing, it was argued that since Amazon and Flipkart favour certain sellers, they are active participants in the process. Amazon, on the other hand, submitted that its algorithm is dictated by consumers and preferential listing is based upon the reflection of the consumers.

Counsel for Flipkart had argued that the anti-trust body's prima facie views are not supported by any evidence and no agreement, which has adverse effect on competition, has been placed on record.

Counsel appearing for DVM submitted that Amazon in its writ petition has mentioned there are agreements which they sign with smartphone manufacturers, which shows they have an understanding with the sellers.