Karnataka HC allows CCI probe against 'alleged violations' by Amazon, Flipkart

Quashing the petitions of the e-tailers, the Karnataka High Court on Friday allowed the Competition Commission of India (CCI) to probe the alleged violations of the competition law by Amazon and Flipkart.

Justice PS Dinesh Kumar dismissed the petitions, which challenged the CCI probe into the e-commerce firms, and allowed the watchdog to investigate the reported violations by them.

"CCI can go ahead with a probe against Amazon and Flipkart for alleged anti-competitive practices," said the single-judge bench in its order.

The judge did not agree with the petitioners' contention that the probe was in violation of the Competition Act after the CCI counsel said that an inquiry by the Enforcement Directorate (ED) did not bar the watchdog from the probe.

The US-based e-tail giant Amazon and Flipkart's owner Walmart in February 2020 had sought a stay against the CCI order, which asked the director-general to investigate its anti-competitive means in selling smartphones online at heavy discounts.

The CCI ordered the probe after the Confederation of All India Traders (CAIT) and the Delhi Vypar Mahasangh (DVM), representing micro, small and medium enterprises (MSMEs) and traders, accused the e-commerce firms of unfair trade practices.

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 BC 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.

The traders' apex body (DVM) had alleged in October 2019 that the e-tailers were giving preferential treatment to select vendors with indirect control on their operations, especially in launching smartphones in the country.