‘Probe is into operations, not source of funding': CCI rebuts Amazon’s plea in HC

The Karnataka HC will hear the matter again on Friday and decide if an interim stay on the probe should be granted.
‘Probe is into operations, not source of funding': CCI rebuts Amazon’s plea in HC
‘Probe is into operations, not source of funding': CCI rebuts Amazon’s plea in HC
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As the courtroom battle between Amazon and Competition Commission of India continued, CCI, represented by advocate Harish Narasappa, rebutted the points made by Amazon’s counsel Gopal Subramanium on Wednesday.

While Amazon had argued that a probe into Amazon and Flipkart was a violation of FDI policy and a violation of jurisdiction, CCI said that the FDI policy is a policy of the Central government and falls under the jurisdiction of the Central government. However, that pertains only to the source of funding they receive or ownership structure, both of which the CCI is not looking into. The area the CCI will be looking into, it stated, are the operations. 

However, no conclusion was reached in the matter of Amazon asking for a stay into the probe directed by CCI into Amazon and Flipkart over allegations of deep discounting and predatory pricing, along with preferential listing and exclusivity. 

The court heard the Competition Commission of India and the Delhi Vyapar Mahasangh on Thursday, both of whom said that it was well within the jurisdiction of the CCI to investigate the matter.  

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 information given 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.

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

Rebutting Amazon’s arguments, Harish Narasappa said, “Merely because it satisfies the FDI policy, it doesn't exempt you (Amazon) from other laws,” the lawyer said. CCI went on to add that the probe order does not make any reference to FDI at all. 

“There is not a single line that questions the FDI policy. The order only concerned about certain practices carried on by the petitioner (Amazon). The ownership of the petitioner is irrelevant,” Narasappa added. 

Amazon had filed the writ of certiorari under Article 226 of the Constitution of the Indian Constitution, which refers to the power of High Courts to issue certain writs. The order issued by the CCI was under Section 26(1) of the Competition Act, and Amazon questioned the jurisdiction of the CCI for such an order. 

In response, the CCI said that an order under Section 26(1) does not affect any rights, as it is a departmental order and not a quasi-judicial order. 

On Wednesday, Amazon had stated that they should have been heard prior to such an order being issued. However, the CCI said that such a right doesn’t exist, and therefore, Amazon cannot demand it and that not hearing Amazon’s grievances does not violate any principle of law. 

Amazon had extensively quoted the ‘Market Study of E-Commerce’ by the CCI, which Narasappa stated had nothing to do with the case, and to link the report to the order is an “irrelevant fact”.

Advocate KG Raghavan, who appeared for the Delhi Vyapar Mahasangh, argued that the issues of other supposed violations can be looked into by the respective regulatory bodies. 

He stated that when CCI is given information regarding practices undertaken by e-tailers that have adverse effects, it cannot sit. He stressed that when there is a question of healthy competition in the market and it involved a question of public interest, the matter of merely investigating into the anti-competitive practices of the two should not be stayed. 

“Public interest should not be sacrificed at the altar of assertion of private rights,” he stated. 

He stated that the enquiry was a decision taken by the Commission, and the requirement for such an enquiry is exclusive domain of the CCI. 

The matter of exclusive tie-ups also came up before the court, where Mahasangh stated that the CCI study stated that there is a nexus between the retailers and brands, to which Amazon retorted that it was not a retailer or manufacturer, but the platform. 

While Amazon maintained that it does not have agreement with manufacturers but only sellers, Raghavan stated that whether these agreements are anti-competitive in nature needs to be investigated. 

Delhi Vyapar Mahasangh’s counsel also maintained that things like preferential listing and exclusivity are not matters that the court has to look into, but are market practices, which makes the best person to decide the matter the CCI.  “The court should lead in favour of exercise of jurisdiction by a expert regulator,” Raghavan added. 

Referring to Amazon’s petition, Raghavan told the judge: “Apart from the hypersensitive position, it only indicates arrogance. This is flexing of muscle, please don't allow that”

The Confederation of All India Traders (CAIT), which also asked to be impleaded in the matter said that Amazon is making a futile attempt to stay the process of the law without any merit.

“We have full trust and confidence on the Judiciary which will take note of the fact that Amazon merely attempting to de-rail the investigation of CCI,” Praveen Khandelwal, general secretary of CAIT said.

The Karnataka HC will hear the matter again on Friday and decide if an interim stay on the probe should be granted.


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