Appeals by Amazon, Flipkart against dismissal of challenge to CCI probe into smartphone sales quashed by Karnataka High Court

Appeals by Amazon, Flipkart against dismissal of challenge to CCI probe into smartphone sales quashed by Karnataka High Court

A Single Judge order dismissing the pleas filed by Amazon and Flipkart challenging a Competition Comission of India (CCI) probe into alleged competition law violations was upheld by the Karnataka Court.

The Court held, "By no stretch of imagination can inquiry be quashed at this stage...Appellants should not be afraid of investigation of CCI."

The order was passed by a division bench of Justices Satish Chandra Sharma and Natraj Rangaswamy in a batch of appeals moved by Flipkart and Amazon against the Single Judge (HC) order of June 11. The Bench quashed the plea and said, "By no stretch of imagination can inquiry be quashed at this stage...Appellants should not be afraid of investigation of CCI...In the considered opinion of the Court, appeals filed by appellants are devoid of merit and deserved to be dismissed..."

June 25 was the date for reserving judgment on the matter. The CCI order in question called for a Director General (DG) investigation into allegations of anti-competitive conduct in the online sale of smartphones on the e-commerce platforms. Delhi Vyapar Mahasangh (DVM) – which comprises traders from micro, small and medium enterprises - had accused Amazon and Flipkart of predatory pricing, deep discounting, preferential seller listing, and exclusive partnerships

Amazon and Flipkart's petitions were earlier dismissed on June 11 by Justice PS Dinesh Kumar after which appeal petitions were filed by the e-commerce majors challenging the order. . DVM, Amazon and Flipkart then made their submissions in the matter before the division bench.

The e-commerce sellers are pushing up certain sellers due to a search bias on their platforms, argued CCI counsel, Additional Solicitor General (ASG) Madhavi Divan Divan argued that visibility for all sellers is supposed to be same and there has to be rational criteria for the same. She said that it cannot be said that Flipkart and Amazon are not part of the production chain involving supply, distribution etc. The Competition Act is meant to remove anti-competitive elements and make sure everyone is on a level playing field, Divan said.

Divan said, "If there is nothing to hide, then there is no reason to scuttle the investigation."

On its part, Amazon said that its algorithm is dictated by consumers and preferential listing based on consumer reflections.

Amazon said that the Single Judge had forgotten not to treat the online market as an instrument to promote competition.

Appearing for Flipkart, Senior Advocate Harish Salve, said, "If I give someone gives a discount on rent, how does it become an agreement in production scale?"

DVM was represented by Advocates Abir Roy and Gautamaditya Sridhara, who said that Amazon in its writ petition had mentioned that they sign agreements with smartphone makers which itself shows that they have an understanding with sellers.