Flipkart petitions Karnataka HC against CCI probe order: Report

We missed this earlier.

Walmart-owned Flipkart last week filed a legal challenge against the anti-trust investigation ordered against the company by the Competition Commission of India (CCI), reported Reuters.

CCI had in January ordered a probe (download copy here) into alleged violations of competition law by Amazon and Flipkart, following which, Amazon petitioned the Karnataka High Court earlier this month — stating that the CCI’s probe lacked prime facie evidence, and that the regulator was overstepping its jurisdiction. The Karnataka HC stayed the investigation (download order here), granting interim relief to Amazon.

Flipkart’s legal filing was reportedly aimed at signalling that it’s aggrieved by the CCI’s probe order — it argued that the CCI ordered the probe without initial evidence that the company’s practices were harming competition. It said the order was “perverse” and passed without application of mind. The company also said that CCI cannot examine matters that fall under the Foreign Exchange Management Act, especially when the Enforcement Directorate is examining the same issues, according to the Mint.

The CCI’s antitrust probe was ordered based on a complaint by a New Delhi based traders’ group Delhi Vyapar Mahasangh about preferential treatment to select sellers and deep discounting by Amazon and Flipkart. Both companies have dismissed allegations of predatory pricing and deep discounting in the past and claimed that that they are a marketplace and that sellers have the flexibility to set their own prices.

What the Karnataka HC said about the CCI probe order

On February 14, the Karnataka HC granted interim relief to Amazon by staying the CCI’s investigation. Gopal Subramanium and Sajan Poovaya represented Amazon, which argued that traders’ bodies CAIT has approached Delhi Vyapar Mahasangh to complain to the CCI – pointing out that the demand draft for the Rs 50,000 submitted by DVM was purchased by CAIT.

It added that the CCI’s probe order is “unsustainable” as the Central government has initiated an investigation against Amazon under FEMA 1999 as part of a case in the Delhi High Court. The CCI should have waited for an outcome of this investigation before ordering their own, argued Amazon.

The CCI argued that it has merely directed the Director General to hold an investigation — and it can even choose to close the complaint after an investigation report — the CCI will hear Amazon before passing any order.