Karnataka HC allows CCI to investigate Amazon, Flipkart

It upholds probe into anti-competitive agreements entered into by e-commerce majors

(FILES) In this file photo taken on September 18, 2018 an employee of Amazon India walks out of a security gate at Amazon's newly launched fulfilment centre on the outskirts of Bangalore. - India's commerce ministry has announced it will tighten e-commerce rules affecting Indian online sales leader Flipkart -- recently acquired by US retail giant Walmart -- and US rival Amazon from selling goods from companies in which they hold an equity stake. (Photo by MANJUNATH KIRAN / AFP)

In a setback to e-commerce majors Amazon and Flipkart, the Karnataka High Court on Friday upheld the Competition Commission of India’s decision to conduct an investigation through its Director General into whether they had entered into anti-competitive agreements in violation of the provisions of the Competition Act 2002.

Justice P.S. Dinesh Kumar passed the order while dismissing the petitions filed by Amazon Seller Services Pvt. Ltd., and Flipkart Internet Pvt. Ltd. The e-commerce companies had questioned the January 13 order of the CCI, which had ordered a probe through its Director General.

The CCI had acted on a complaint by Delhi Vyapar Mahasangh (DVM), which had alleged that Amazon and Flipkart were giving preference to select sellers and offering deep discounts by indulging in anti-competitive agreements.

Defending its decision, the CCI had contended that the investigation was ordered after careful examination of records found prima facie material against the companies as “there appears to be exclusive partnership between smartphone manufacturers and e-commence platforms.”

The High Court, on February 14 2020, had passed an interim order staying the CCI’s order. Following this, the CCI had approached the apex court, which in October 2020 had asked the CCI to approach the High Court.

With today’s order, the Director-General of CCI can proceed with the process of investigation.