CCI probe ordered without prima facie evidence: Amazon in Karnataka HC

In the petition filed by Amazon for quashing or setting aside the CCI order, Flipkart has also been made a respondent.
CCI probe ordered without prima facie evidence: Amazon in Karnataka HC
CCI probe ordered without prima facie evidence: Amazon in Karnataka HC
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The Karnataka High Court on Wednesday refused to pass an interim stay on the probe ordered by the Competition Commission of India (CCI) into Amazon and Flipkart over allegations of deep discounting and predatory pricing, along with preferential listing and exclusivity.

Last week, Amazon had filed a petition with the court seeking to quash or set aside the CCI order which directed for a probe, and an interim stay on the same till the court is hearing the matter. The CCI order was based on a complaint filed by the Delhi Vyapar Mahasangh that the two e-commerce majors were violating sections of the Competition Act of 2002. The Delhi Vyapar Mahasangh has also alleged that the two companies have several tie-ups with private labels which get more preference in terms of sales, especially in the smartphone category.

On January 13, the CCI ordered a probe into the activities of Amazon and Flipkart based on a complaint filed by the Delhi Vyapar Mahasangh.

In the petition filed by Amazon for quashing or setting aside the CCI order, along with the Delhi Vyapar Mahasangh and the CCI, Flipkart has also been made a respondent. 

In its petition, Amazon said the CCI order was “passed without application of mind, that it is perverse, unreasonable, unjust, arbitrary, untenable in law and that it will cause serious prejudice”. They also said that there was no prima facie evidence on the basis of which this probe will be carried out. 

Amazon presented its arguments on Wednesday, and CCI and the Delhi Vyapar Mahasangh are expected to make their arguments on Thursday, when the matter will come up again before Justice PS Dinesh Kumar.

The Confederation of All India Traders (CAIT) have also asked to be impleaded in the matter. 

In court, Amazon, represented by advocate Gopal Subramanian, maintained that the probe had been directed by the CCI without any factual backing, and that it was an inference based on information given by the Mahasangh. Amazon further said that prior to the order being passed by the CCI, the version of the parties involved should have also been taken into account. 

Amazon told the court that there were no preferred sellers on the site.  The matter of Cloudtail India, Amazon’s largest seller was brought up, to which the advocate submitted to the court that 76% of the company — a joint venture between Amazon and Narayana Murthy’s Catamaran Ventures — is owned by the latter. It maintained that it has no equity control, board control or management control in Cloudtail.

Amazon maintained that they are a marketplace, and the discounts offered are between the seller listed on the platform and the manufacturers themselves. 

It extensively referred to the 'Market Study on E-commerce in India' published by the CCI just days before the CCI order directing the probe. In it, it laid out areas where platforms should self-regulate — including search ranking, discount policies, and the collection, use and sharing of data. A lot of this, according to Amazon, was based on its suggestions. Amazon stated in its petition that although the report was published prior to the order, the CCI order “fails to consider” the CCI’s own findings outlined in the study, which demonstrates its lack of awareness. 

The question of Amazon’s discounts, Subramanian said, was during festival season when it was waiving off its fees, and it was upto the seller’s discretion to offer discounts.

Amazon said that such an investigation would hamper its reputation. “It is well settled that having regard to the publicity as well as the degree of irreparable harm which would be caused to the petitioner not only in India but the world over by referring to an antitrust inquiry in the Indian jurisdiction when no grounds exist, would create serious civil consequences,” Amazon stated in its petition. 

In a statement, CAIT Secretary General Praveen Khandelwal stated that not only did Amazon was making frivolous claims of not engaging in business malpractices and FDI violations, but were also misdirecting the court by saying that this is a witch-hunt led by CAIT to malign Amazon. 

“When they have openly been saying that they are fully compliant to all laws, let there be an investigation. The very effort to stop the investigation is a testimony to their unethical practices,” he said. 

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