Firms must voluntarily agree to such enquiry, says court
The Supreme Court on Monday refused to intervene in an anti-trust investigation ordered by the Competition Commission of India against online giants, Flipkart and Amazon.
A three-judge Bench led by Chief Justice of India N.V. Ramana said the court expected big companies like them to voluntarily agree to such a preliminary enquiry. “You have to submit… enquiry should be permitted,” Chief Justice Ramana orally addressed Flipkart and Amazon, represented by senior advocates A.M. Singhvi and Gopal Subramanium, respectively, during the virtual court hearing.
The companies had appealed to the Supreme Court after the Karnataka High Court confirmed the Competition Commission of India (CCI) decision of January last year to open a probe into the companies for allegedly entering into anti-competitive agreements in violation of the Competition Act of 2002. The companies had denied any mischief and wanted the probe quashed.
“We see no reason to interfere with the orders passed by the High Court of Karnataka dismissing the writ appeals of the petitioners (Flipkart, Amazon). Special leave petitions are dismissed,” the court order recorded.
The court referred to Mr. Singhvi’s submission that the time to reply to the notice issued by the Office of the Director General, Competition Commission of India, is going to expire on August 9. Mr. Singhvi had sought more time.
“Taking into consideration the request made by the senior counsel, time to reply to the notice is extended by a further period of four weeks from today. It is made clear that no further extension of time would be granted for the purpose,” the court noted.
In the hearing, Mr. Subramanium submitted that two essential components — an anti-competitive agreement and a hostile effect on fair competition — which would have justified the CCI’s order were both missing in this case.
The CCI order read that it was “of the opinion that there exists a prima facie case which requires an investigation by the Director General to determine whether the conduct of the Opposite Parties (Flipkart and Amazon) have resulted in contravention of the provisions of the Competition Act… Accordingly, the Commission directs the Director General to cause an investigation to be made into the matter… The Commission also directs the Director General to complete the investigation and submit the investigation report within a period of 60 days from the receipt of this order”.
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.
The Commission recorded the submissions made by DVM that there were “instances of several vertical agreements between Flipkart with their preferred sellers on the platform and Amazon with their preferred sellers, respectively which have led to a foreclosure of other non-preferred traders or sellers from these online marketplaces. It has been alleged that most of these preferred sellers are affiliated with or controlled by Flipkart or Amazon, either directly or indirectly”.
“Flipkart provides deep discounts to a select few preferred sellers on its platform which adversely impacts non-preferred sellers such as members of the Informant from competing with such sellers on Flipkart’s online platform… Amazon and these preferred sellers have the same contact details are also evidence of linkage between them. Moreover, Amazon has its own private label brands which are sold only through these preferred sellers,” the CCI order read.
Defending its decision in the High Court, 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 had said they (Amazon and Flipkart) should not “feel shy in facing an inquiry by the Competition Commission of India”.
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