The Karnataka High Court on Friday dismissed the plea by e-commerce giants Amazon and Flipkart on the investigation ordered by the Competition Commission of India (CCI) against them for alleged violations of provisions of competition laws. Justice P S Dinesh Kumar passed the order, dismissing the petitions filed by the two companies.
The High Court order 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. Therefore, the impugned order does not call for any interference," it said. The Court also 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.
It also pointed out that Section 26(1) of the Competition Act, 2002, does not mention about issuance of any notice to any party before or at the time of formation of an opinion by the Commission on the basis of information received by it.
This section is related to procedure for inquiry based on information or complaint and if the commission is of the opinion that there exists a prima facie case.
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". They had also noted that the petitioners were not provided with any notice.
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 smart phones and related accessories.
The court had earlier stayed the probe through an interim order when Amazon and Flipkart had challenged the CCI order against them in February 2020.
During the hearings, which lasted for 40 days over the months, on their petitions in the high court, Amazon and Flipkart had denied any wrongdoing.
Welcoming the court order, CAIT national president B.C. Bhartia said the CCI should begin its probe into the unfair trade practices of Amazon and Flipkart.
"The court decision vindicates our stand that Amazon and Flipkart's business models are in violation of the FDI (foreign direct investment) policy, rules and other laws," said Bhartia in a statement from New Delhi.
CAIT secretary-general Praveen Khandelwal said the CCI found a prima facie case for investigation against Amazon and Flipkart for violating competition law and distorting the level-playing field in January 2020.
"The central and state governments should act against the e-tailers violating the law and take speedy action against them," asserted Khandelwal.
The CAIT also urged Union Commerce and Industry Minister Piyush Goyal to issue a new press note, replacing press note number 2 of the FDI policy, blocking escape routes for foreign funded e-commerce firms.