Exponential growth in online market due to COVID-19; essential to preserve its sanctity: CCI tells Karnataka High Court

The exponential growth of the online market over the past one year owing to the COVID-19 pandemic, has made it all the more important to preserve its sanctity, the Competition Commission of India (CCI) told the Karnataka High Court on Thursday..The submission was made during the hearing of the challenge to the CCI order calling for an investigation into alleged anti-competitive practices on the part of Amazon and Flipkart.."There has been an exponential growth in online market in the past one year, owing to the pandemic...It is extremely important to preserve the sanctity of online marketplace," opined Additional Solicitor General (ASG) Madhavi Divan, appearing for CCI, submitted before Justice PS Dinesh Kumar..Referring to exhaustive arguments made by counsel for the e-commerce giants, ASG Divan said that the matter has been argued as if there has been a full-fledged adjudication by the CCI."In fact, we are very far from adjudication," Divan added..ASG Divan also refuted the submission made by Senior Advocate Gopal Subramanium, appearing for Amazon, that CCI ought to have kept the confidentiality of its orders calling for a probe. Divan argued that a person making a complaint in a competition law matter is the "informant" and not a complainant, as such proceedings are "in rem". Therefore, the same need not be kept private as these are matters of public importance, she said."Why should the CCI keep the order of investigation a secret?....The proceedings are in rem.".The matter will be next heard on February 26..Previously, Amazon and Flipkart had made extensive submissions challenging the CCI order ordering a probe into their affairs. During an earlier hearing last month, Subramanium had said, "The allegation that we (Amazon) have preferred sellers is completely wrong. There is no direct relationship between me or any seller. The brand chooses the seller. I am only a market place... ".CCI decision to probe Amazon is in flagrant violation of Competition Act: Gopal Subramanium to Karnataka High Court.Subramanium further submitted that the allegations levelled against Amazon by the informant, such as exclusive launch for certain products, predatory pricing and preferred sellers, has been taken as the "gospel truth" by the Commission without seeing material on record. "Without checking the information provided by the informant, CCI forms prima facie opinion," he said..On the allegation of deep discounting, it was clarified that all discounts are offered by the seller and not Amazon. It was further added that the CCI order was in violation of the Competition Act. "CCI's decision, if I may, is flagrantly in violation of the Competition Act, whose objective is to facilitate competition.....To investigate into an online platform, there must be proper information and reason," said Subramanium..Flipkart too made similar arguments before the Court. Senior Advocates Udaya Holla and Dhyan Chinnappa submitted that the entire logic and reason behind the CCI order was fallacious..It was added that merely having exclusive agreements as alleged by the informant in not enough. The said agreement has to create an appreciable adverse effect on the market, elaborated Holla. .Chinnappa had contended that the CCI had failed to recognize and establish the “existence of an agreement” before forming a prima facie opinion under Section 26(1) of the Competition Act. It was further argued that Flipkart has no nexus to any sellers on its e-commerce marketplace platform..About a year ago, the Court had granted interim relief to Amazon by staying the investigation into alleged anti-competitive practices on the part of the e-commerce giant ordered by the CCI. Shortly thereafter, the same relief was granted to Flipkart as well. .Breaking: Karnataka HC stays CCI order calling for probe into alleged anti-competitive conduct by Amazon.[Read a detailed account of the hearing here]