Blow to Amazon and Flipkart: Karnataka HC dismisses plea against CCI probe

The Karnataka High Court on Friday, July 23, dismissed a petition filed by Flipkart and Amazon challenging an investigation ordered by the Competition Commission of India (CCI) against them for alleged violations of provisions of competition laws. The court upheld the June 11 verdict of a single-judge bench, which had allowed the investigation ordered by the antitrust body to continue. The appeal was heard by a division bench of Justice Satish Chandra Sharma and Justice Nataraj Rangaswamy.

The bench reportedly said that the appeals were “devoid of merit and substance”, and that they should not feel shy about being probed if they are not involved in any violation of provisions of the Competition Act, 2002. The judges said they did not find any reason to interfere, and dismissed the petitions. It reportedly said that the enquiry cannot be crushed at the initial stage. 

The previous order of the court by Justice P S Dinesh Kumar, dismissing the plea by the two against the investigation, said that "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,” the order had said.

The court earlier noted that the order passed by the commission is an 'administrative direction' to one of its wings departmentally and without entering upon any adjudicatory process. The grounds urged on behalf of the petitioners included that the impugned order by CCI is ultra vires the object and purpose of Competition Act and suffers from "non-application of mind".

On January 13, 2020, fair trade regulator CCI ordered a probe against Flipkart and Amazon for alleged malpractices, including deep discounting and tie-ups with preferred sellers on their platforms, following which both companies had moved the High Court, seeking quashing of the probe order.

The Karnataka High Court on February 14, 2020 granted an interim stay on the investigation ordered by the CCI. Following this, the CCI had moved the Supreme Court, which on October 26, 2020 asked it to approach the High Court. The CCI's January 2020 probe order followed a complaint filed by Delhi Vyapar Mahasangh, whose members comprise many traders dealing in smartphones and related accessories.

The verdict was welcomed by the Confederation of All India Traders, who said it vindicates their stand that “Amazon and Flipkart business model is entirely based on violating the FDI policy, rules and other laws, mischievous business practices, therefore, without wasting any more time, the CCI should immediately begin its probe”.

With inputs from agencies