Скачать или смотреть CCI to HC: Halting probe against Amazon, Flipkart harmful for Indian economy

Competition Commission of India (CCI) has urged a division bench of the Karnataka High Court to not stall its probe against Amazon and Flipkart, claiming that any further stay on the probe will have "serious consequences for the economy".


Appearing for CCI, Additional Solicitor General (ASG) Madhavi Divan argued that there's no civil liability at this stage of the probe against the online marketplaces. She said that even if CCI's inquiry reveals some malpractice, Amazon and Flipkart will get a chance to present their side of arguments before CCI reaches a decision.


CCI is probing Amazon's alleged links with Appario and Cloudtail; and Flipkart's alleged links with WS Retail and Omnitech. Divan pointed to the stay imposed on the probe by a single-judge bench of the High Court in February 2020, while sounding the dangers of a possibility if the allegations turned out to be true eventually. She argued that not probing the two online marketplaces for nearly 1.5 years might have damaged the economy irreparably, indicating that many MSMEs have already been pushed out of business during the pandemic.


CCI maintained that while there are numerous benefits of e-commerce, but needs to be kept competitive and online platforms are meant to be neutral. Opposing arguments on the inapplicability of Competition Law on Amazon and Flipkart, Divan argued that online marketplaces are very much a part of the production chain. She also submitted that competition law itself is an evolving subject, arguing that it is incorrect to conflate online marketplaces with malls as the former are not passive players.


Taking an example from malls, she pointed out that shops at strategic locations have higher rentals than those located at the far end of the mall. She noted that the differential rent practice in malls is transparent as mall owners don't dictate customer behavior, claiming that this is where physical marketplaces differ from their online counterparts. She argued that anti-competitive agreements may not have been made in writing, but maybe operating with a tacit understanding.


Allegations before the CCI claim that both the online marketplaces put many preferred sellers or proxies on their platforms, with whom they had a nexus either through investment, stake or partnership. Complainants have alleged that many sellers encouraged to sell at a much lower price, by engaging in deep discounting or cash-burning practices. While questioning the way how sellers sustained deep discounts, to the tune of 42% at times, complaints before CCI had claimed that platforms were giving discounts to sellers to sell at losses with a strategy to gather critical mass, wipe out the competition, and then dictate the market.


CCI will continue presenting its arguments before the Karnataka High Court tomorrow Petitions by Amazon and Flipkart have contested the June 11 order by a single-judge bench, which had dismissed their petitions against an anti-trust probe by allowing a probe by the CCI into allegations of anti-competitive practices by the two online retailers. CCI is currently probing allegations of predatory pricing, deep discounting, preferential seller listing, and exclusive partnerships against Amazon and Flipkart.
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