Amazon files plea in Karnataka HC against CCI’s order for probe into alleged violations of Competition Law

Amazon files plea in Karnataka HC against CCI’s order for probe into alleged violations of Competition Law

Rintu Mariam Biju

Amazon recently filed a petition before the Karnataka High Court seeking to quash the probe ordered by the Competition Commission of India (CCI) against the e-commerce giant for alleged violations of Competition Law.

The matter was heard yesterday by Justice PS Dinesh Kumar of the Karnataka High Court. Senior Advocates Sajan Poovayya and Gopal Subramanium, appearing on behalf of Amazon, argued the matter at length.

Subramanium argued that the CCI order was passed “without application of mind" and that it would cause irreparable loss to the reputation of the company if an investigation is allowed in the matter.

Subramanium further stated that the e-commerce market study report that was published by CCI on January 8 was not considered by the competition regulator.

Elaborating on this report, Subramanium stated that consumers benefited greatly from e-commerce. In fact, discounts and other deals have revolutionized the entire sector, thus attracting more investors and newcomers into the market. This has increased competition rather than having adversely affected it, he clarified. He stated that discounts and other deals are "a part of market dynamics".

On the point of preferential treatment to sellers, the petition filed by Amazon states that the agreements are between the manufacturer and the seller and that Amazon has no role to play in it. Amazon is merely a platform and do not enter into any exclusive agreements with the sellers, Subramanium argued.

On the point of FDI norms, it was stated that as per the present FDI policy, 100% automatic route is permitted to foreign direct investments in marketplace based e-commerce. However, it is not permitted in inventory based e-commerce. Amazon belongs to the former category.

Moreover, in the present case, the CCI's order bypasses the Central government's authority in implementation of FDI policy. CCI cannot stray into its jurisdiction, the petition contends.

The plea also states that the CCI’s findings are perverse, arbitrary and untenable in law. It has thus prayed for the quashing or setting aside of the CCI order.

Amazon further pointed out that the allegations of deep discounting, preferential treatment to sellers, and leveraging its dominant position were levelled only against Flipkart and not Amazon. About an year ago, in the complaint filed by AIOVA, no specific allegations were leveled against Amazon, the plea mentions.

The petition further submitted that no reasonable opportunity to be heard was provided to it before the order was passed.

Throughout the course of the investigation, Amazon had co-operated with CCI at all times, the plea notes. In this regard, the petition reads,

That on January 8, 2020, the Respondent No. 1 had made public its finding and recommendations pertaining to the market study undertaken (in April 2019) in relation to e commerce entities operating in online retail. In fact, the Petitioner had assisted the Respondent No. 1 during the course of the e-commerce market study and participated in the questionnaire survey, focused group discussions, one-to-one meetings, multi stakeholder workshops, conferences and seminars organized by the Respondent No.1, from time to time. While the Petitioner was in the process of reviewing the findings and recommendations contained in the e-commerce market study report, to the utmost shock and dismay of the the Petitioner, the Respondent No. 1 passed an impugned order dated January 13, 2020.

Petitioner plea

It is further stated that it was the legitimate expectation of the petitioner that since the self-regulatory measures were prescribed in the e-commerce market study report, it would be granted a reasonable period of time to review, assess and implement them.

Additionally, the petitioner points out that the order does not contain or analyse how the “so called deep discounting, preferential treatment is result of anti-competitive agreement, which was in violation of Section 3(4) of the Competition Act.

The plea further contended that there was no formal determination of violation of competition laws, which needs to be pre-determined before the investigation.

In its order, the CCI has not looked into the bona fide of the informant in the matter, Delhi Vyapar Mahasangh (DVM), the petitoner additionally submits.

In this backdrop, the plea prayed to quash the CCI’s order that was passed earlier this year.

As for interim relief, the petition prays for an stay in the proceedings directed by CCI. On that point, the matter will be next heard on February 13.

Last month, the CCI had directed its Director-General to start investigating Amazon and its rival Flipkart over serious allegations of violation of competition law, including practices such as predatory pricing, deep discounting, preferential seller listing, exclusive partnerships, private labels, etc, The informant in the case was DVM, whose members comprise traders from many micro, small and medium enterprises, and rely on trade of smartphones and related accessories.

The CCI had ordered the Director-General to complete the investigation within 60 days from the receipt of the order.

[Read the Petition here]

amazon writ in karnataka HC.pdf
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