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Amazon moves Karnataka HC seeking stay on CCI probe: Report

Amazon India
Amazon India

Amazon India moved the Karnataka High Court, on February 10, seeking a stay on a probe ordered by the Competition Commission of India (CCI) last month, which sets to investigate alleged competition law violations by the company, Bloomberg Quint reported. The American e-commerce company reportedly claimed that the regulator had passed the order to investigate the alleged anti-trust issues “without application of mind” and that it will cause “serious prejudice” against the company. The CCI had ordered a probe into alleged competition law violations by Amazon and Flipkart on January 13.

The company also reportedly claimed that, if allowed, the CCI investigation can cause serious damage to its goodwill and reputation and requested the High Court to provide relief to the company based on “facts and circumstances of the case in the interest of justice”, according to Bloomberg Quint. An Amazon spokesperson declined to comment since the matter is subjudice.

CCI probing Amazon’s “anti-competitive behaviour”

Set to investigate allegations of deep discounting, preferential treatment, etc.: CCI’s probe, against Amazon and Flipkart, was to investigate four alleged violations:

  1. Exclusive launch of mobile phones
  2. Preferred sellers on the platforms
  3. Deep discounting
  4. Preferential promotion of private labels.

The CCI had initiated the probe following a complaint filed by the Delhi Vyapar Mahasangh (DVM), a group of MSME (Micro, Small and Medium Enterprises) smartphone traders. DVM had accused that Amazon has certain agreements with sellers (that are allegedly controlled by the company) and that it gives these sellers unfair preferential treatment over others. These vertical agreements give an advantage to the preferred sellers, such as in the form of a preferential listing, where Amazon gives the word ‘fulfilled’ to the seller and creates a search bias for the products sold by them, the complaint said. Amazon was also accused of offering prices that were significantly lower than the actual costs, by utilising the massive resources the company possesses, which allegedly results in the creation of high entry barriers for other traders.

Traders accuse Amazon of impacting economy negatively: Both the e-commerce platforms were accused of creating an “inherently anti-competitive” model for the e-commerce industry. The complaint by DVM said that the current practices employed by the company exclude other competitors from the market and that this can have far-reaching consequences on the economy of the nation.

Following the complaint, the CCI had noted:

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“…the Commission is of the opinion that there exists a prima facie case which requires an investigation by the Director General (‘DG’), to determine whether the conduct of the OPs [opposite parties, Amazon and Flipkart] have resulted in contravention of the provisions of Section 3(1) of the Act read with Section 3(4) thereof.”

It is worth noting that Amazon has dismissed allegations of predatory pricing and deep discounting in the past and claimed that it is a pure marketplace and that sellers have the flexibility to set their own prices.

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