Supreme Court refuses to stop CCI probe against Amazon and Flipkart

The Supreme Court on Monday refused to interfere with Karnataka High Court's order which declined to stop the investigation initiated by the Competition Commission of India (CCI) against Amazon and Flipkart for alleged anti-competitive practices.

However, the court extended the time to join the CCI probe by four weeks on a request by senior advocate Dr AM Singhvi, who appeared for Flipkart.

"We see no ground to interfere. However we grant four weeks for the expiry to submit to enquiry,” said the court, according to the law platform Bar & Bench.

Refusing to set aside the Karnataka High Court's ruling in the matter, Chief Justice of India NV Ramana remarked:"We expect big organisations like Amazon and Flipkart to voluntarily go for enquiry and you don't want even that? You have to submit and enquiry has to be permitted,” according to Bar & Bench.

Senior advocates Gopal Subramanium and Sajan Poovayya appeared for Amazon. Solicitor General Tushar Mehta appeared for the CCI.

The Bench of CJI Ramana and Justice Surya Kant was hearing an appeal by e-commerce firms Flipkart and Amazon against the July 23 order of the Karnataka High Court that refused to set aside a probe ordered by the CCI into the two firms.

Legal experts said that both Amazon and Flipkart would now have to cooperate in the CCI’s antitrust investigation.

“It is a setback for them, because their (business) model is such that there could be implications related to anti-competitive practices,” said Salman Waris, managing partner at technology law firm TechLegis Advocates and Solicitors. “Besides that it increases their compliance processes. This could lead to CCI imposing a fine on them if any inquiry goes against them.”

Legal experts said that in the long term, the Supreme Court’s decision might create a bigger compliance issue for Amazon and Flipkart. They said that the companies can’t do much about challenging it anywhere.  “They might want to go for a review, but I doubt that that is going to change anything as rarely the Court would go against its own order,” said Waris of TechLegis.

Last month, a division bench of Justices Satish Chandra Sharma and Natraj Rangaswamy passed the order in a batch of appeals moved by the e-commerce firms against a June 11 order of a Single Judge of the High Court.

While dismissing the plea, the Bench held, “By no stretch of imagination can inquiry be quashed at this stage...Appellants should not be afraid of investigation of CCI...In the considered opinion of the Court, appeals filed by appellants are devoid of merit and deserved to be dismissed.”

Amazon had approached the Karnataka High Court against a CCI order which had called for a Director General (DG) investigation into allegations of anti-competitive conduct in the online sale of smartphones on its platform.

The informant before the CCI, Delhi Vyapar Mahasangh (DVM), the traders’ body, was justifying the CCI decision for a probe. DVM had alleged that these players were giving deep discounts on online sales of smartphones, and cherry-picking sellers. Other allegations included predatory pricing and exclusive partnerships. DVM is an affiliate of the trade body Confederation of All India Traders (CAIT). CAIT had welcomed the Supreme Court’s decision on Monday.

“Now Is the way for CCI to investigate both companies. It’s a big milestone order. Justice given. No scope for Amazon and Flipkart to avoid investigation,” said B.C.Bhartia, National President and Praveen Khandelwal, Secretary-General of CAIT. “We demand (commerce and industry minister) Piyush Goyal to direct CCI to (do) aggressive probe and FM (finance minister) Nirmala Sitharaman to direct ED (enforcement directorate) to send notice to Amazon as well and don’t allow any dilly delaying tactics. We also appeal to Piyush Goyal to implement e-commerce Rules under Consumer Protection Act without any further delay.”