SUMMARY
Flipkart has filed a legal challenge against the CCI investigation
Flipkart alleges the probe is being carried out without evidence of anti-competitive practices
The Walmart-owned company's case is likely to be heard next week
The Competition Commission of India (CCI) had been probing the antitrust behaviour of ecommerce marketplaces in India. Walmart-owned Flipkart has now raised an objection on the same, with filing a legal challenge against this investigation.
A Reuters report said that Flipkart has filed a court petition on February 18 in Bengaluru said that CCI ordered its probe without initial evidence that the company’s practices were harming competition. Further, the company said that “the CCI order was perverse (and) passed without any application of mind”.
“Such an order exposes responsible corporate entities … to the rigours of an intrusive investigation prejudicially affecting not only its credibility and reputation but also its commercial prospects,” the court filing reportedly said. Flipkart in its filing said the “CCI had failed in its duty to close the frivolous complaint and an investigation would harm the company’s reputation, lead to significant managerial time loss and legal costs.”
A Flipkart spokesperson said that it was a “procedural matter”. The case is likely to be heard next week.
The CCI had ordered a probe on a complaint filed by Delhi Vyapar Mahasangh, which alleged that Amazon and Flipkart give preferential treatment to select sellers and offer deep discounting as well. The association emphasised that such practices were creating an anti-competitive environment, giving the ecommerce players an unfair advantage. CCI alleged that the two companies are involved in unethical practices in violation of the competition law.
The CCI investigation order was issued a day before the arrival of Amazon’s founder and CEO Jeff Bezos in India, i.e January 13, 2020. Many small traders in India have accused Amazon and Flipkart of eating into their businesses by deep discounting, predatory pricing, preferential selling, and exclusive tie-ups with brands and banks.
Earlier, Amazon had moved to the Karnataka High Court seeking a stay on the CCI’s investigation. But the CCI clarified that it is not going to stop the investigation as the claims of ecommerce giant were baseless. Amazon told the HC that the CCI passed the order ‘without application of mind’ and they do not have any prima facie evidence to order an investigation into it.
On its part, CCI had informed the HC that it will not stop the investigation as the claims made by Amazon are baseless. CCI’s lawyer for the case, senior counsel Harish Narsappa, also added that Amazon’s claims are ‘mischievous’.
Recently, reports surfaced that CCI failed to find any evidence proving that Amazon and Flipkart had exclusive deals with smartphone manufacturers. The judge pointed out that “in paragraphs No. 22 and 23 (of the CCI order) that there ‘appears’ to be exclusive partnership between smartphone manufacturers and ecommerce platforms. This finding is based on allegations made in the complaint.”
