CCI Can Pursue Investigation Against Amazon, Flipkart: Karnataka High Court

The Karnataka High Court today dismissed writ petitions filed by Amazon.com Inc. and Walmart-owned Flipkart against an order by the competition regulator, paving the way for its investigation arm to examine if the conduct of the two online retailers is anti-competitive.

The high court had granted an interim stay to Amazon and Flipkart. The Competition Commission of India had challenged this before the Supreme Court, which directed the regulator to approach the high court for relief.

In January last year, the CCI had passed a prima-facie order against the two e-commerce companies. It had directed a probe into their practices like discounting practices, exclusive tie-ups and private labels, saying they’re anti-competitive.

The probe was ordered after a New Delhi-based trader group complained that the online retailers were promoting select sellers, hurting business for smaller firms.

The informant—Delhi Vyapar Mahasangh—had alleged that Flipkart and Amazon entered into vertical arrangements with their preferred sellers that were directly or indirectly under their control, leading to the foreclosure of other sellers.

After carrying an initial investigation of the allegations, the competition regulator concluded that there is a “prima facie” case against the online retailers. It, however, denied an investigation against allegations of joint dominance by Amazon and Flipkart on the grounds that such an investigation isn’t contemplated under the Competition Act.

The detailed order of the high court is awaited.