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SC dismisses CCI plea, directs Karnataka HC to decide on antitrust probe into Amazon, Flipkart in 6 weeks: Report

Supreme Court
Credit: Aditi Agrawal

The Supreme Court refused to hear a plea filed by the Competition Commission of India, which sought to remove a Karnataka High Court-directed stay on its probe against Amazon and Flipkart, Bar and Bench reported. Instead, the apex court directed the Karnataka High Court to decide on the matter within six weeks, and said that it will only review the petition in case a decision isn’t made in that time frame. The CCI had ordered a probe into alleged competition law violations by Amazon and Flipkart on January 13.

Solicitor General Tushar Mehta, who appeared for the competition watchdog, reportedly said that CCI’s probe into the e-tailers would not affect the rights of any party. Mehta also said that the Karnataka High Court refused to take the case despite repeated requests from CCI.

CCI’s probe into Amazon and Flipkart

The CCI’s probe against Amazon and Flipkart, initiated in January, was ordered 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.

It 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.

Following the complaint, the CCI had noted:

“… 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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In February, the Karnataka High Court had granted interim relief to Amazon and Flipkart against by staying CCI’s probe into the companies. Amazon had contended, before the Karnataka High Court, that CCI’s probe was based on information from a group of smartphone traders, who had made similar unsuccessful accusations in the past.

In October, CCI appealed in the Supreme Court against Karnataka High Court’s order.

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