Amazon, Flipkart get 2-month relief from Karnataka High Court over a CCI investigation

  • The Karnataka High court decided an interim stay on the anti-trust investigations against Amazon and Flipkart.
  • E-commerce giant Amazon filed a petition at the HC on Monday requesting a stay, to save the company’s reputation.
The Karnataka High court today gave an interim stay order on the anti-trust investigation against two of India’s biggest e-commerce players, Amazon and Flipkart, by the Competition Commission of India (CCI).

The Confederation of All India Traders (CAIT) has voiced their dissent against the two players accusing them of using their dominant position in the market to undercut the value of brand by deep discounting products on their platforms.
In 2019, the Indian government issued a draft National E-commerce policy that restricted the use of these practices. Despite several warnings from the Commerce Minister Piyush Goyal, local retailers have accused the e-commerce of giants continuing to offer deep discounts and discriminating against small sellers.

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The two-month deadline

In January 2020, the CCI ordered an investigation of alleged malpractices — such as deep discounting, listing selected sellers and exclusive partnerships with brands — by Amazon and Flipkart.
CAIT is demanding a ban on these ‘sales’ altogether on behalf of the over 70 million local traders it represents.

The bench has ordered two months interim stay. In that time, the counsels for CCI, Confederation of All India Traders (CAIT) and Delhi Vyapar Mahasangh — as well as Amazon and Flipkart — have been asked to file replies with the court.
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“We have been maintaining in the court that the CCI order that called for an investigation into our the businesses of the e-tailers wasn’t correct since none of the e-commerce companies were asked to clarify their positions,” a member of Amazon’s briefing counsel team told the New Indian Express .

The online retailer filed a writ petition on Monday in the Karnataka HC seeking a stay on the investigation. In an affidavit, Amazon said that the CCI order was passed “without application of mind” and would cause irreparable damage to the company reputation if an investigation is continued further.
The e-commerce policy would also restrict the companies from selling their own goods. However, according to data shared by Amazon India, one-third of all sales are being coordinated by Appario and Cloudtail, which are Amazon’s subsidiaries. The rest of its total gross merchandise value is divided between the other 550,000 smaller sellers on the platform.
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Anti-trust investigations are harassment
Counsel for Flipkart and Amazon also said that the industry body has been filing petitions across the country amounting to harassment. When Amazon CEO Jeff Bezos visited India last month, he was greeted by a throng of protestors accusing him of killing competition for brick-and-mortar stores in the country.

India’s commerce minister, Piyush Goyal, also accused Amazon of predatory pricing. “It is not as if they are doing a favour to India when they invest a billion dollars,” he said accusing the e-commerce giant of taking business away from Indian companies.

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For now, Amazon and Flipkart have two months to disprove the accusations. It’s uncertain which way the case will unfold, but the ultimate result could set the precedent for anti-trust investigations against global companies in India.

Meanwhile, the e-commerce policy is set to come into the picture by April or May 2020.
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