CCI to move Supreme Court to break logjam in Amazon, Flipkart anti-trust case

New Delhi: India’s competition watchdog may knock on the doors of the country’s top court in an anti-trust case involving e-commerce majors Amazon and Flipkart, and some sellers on their platforms, two persons aware of the development said.

The Competition Commission of India (CCI) is considering moving the Supreme Court to transfer to it more than a dozen writ petitions filed by these sellers in the high courts of Karnataka, Telangana, Madras and Kolkata.

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The petitions have alleged procedural lapses in a CCI investigation report that found the e-commerce platforms favouring select sellers over others.

The CCI’s effort is to ensure that these petitions are effectively addressed in one go, one of the two persons quoted above said on condition of anonymity.

A second person, who also spoke on condition of not being named, said that the multiple writ petitions filed by the sellers have effectively brought CCI’s proceedings in the case to a halt. CCI is now seeking expert counsel on a transfer petition to the Supreme Court and get all the related cases clubbed, the person added.

Seeking early closure

Experts said CCI can move a transfer petition to the Supreme Court to bring an early closure to the matter and not fight multiple cases at various high courts.

K. Narasimhan, advocate, Madras High Court, said a transfer petition would help the CCI address multiples queries posed by various parties in different courts.

“The longer these cases drag, the small sellers and MSMEs who are dependent on the ecommerce ecosystem could be severely impacted," Narasimhan added.

CCI’s director general of investigation (DGI) had in August sent a report to CCI confirming suspected violations of competition law by the two e-commerce platforms, after looking into allegations of preferential treatment and preferential listing to certain sellers on the platforms, exclusive product launches and deep discounting.

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The sellers who have gone to court argue that information was initially sought from them as third parties, but they were later treated as opposite parties without the Commission’s permission.

Appario Retail Private Ltd., one of the companies that went to Karnataka High Court challenging CCI’s investigation findings in September, alleged that CCI’s DGI submitted its report classifying the company as ‘opposite party’ in violation of established procedures as the Commission’s prior approval was needed for altering one’s status from ‘third party’ to ‘opposite party’ during the course of an investigation.

On 27 September, the Karnataka High Court heard three identical petitions from sellers and granted an interim stay on CCI’s proceedings. The court is set to hear the matter next on 20 November.

Queries emailed to the CCI on 11 November and to Amazon, Flipkart and Appario Retail on Tuesday seeking comments for the story remained unanswered at the time of publishing.

Prone to litigation

Experts acknowledged that anti-trust cases are often prone to litigation.

“It’s not uncommon for antitrust cases to be challenged in courts since there are usually high stakes involving significant potential penalties, changes to business models and the company’s own reputation. The flurry of court cases is not uncommon in this context," said Samir R. Gandhi, partner and co-founder of law firm Axiom 5 law chambers.

“The CCI has taken to proactively appointing counsel and defending these cases, and it is hoped that with the introduction of the new settlement and commitments mechanism earlier this year, companies will have less incentive to litigate and instead opt for a time-bound resolution of antitrust issues," said Gandhi.

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The new settlement scheme allows companies found to have breached the competition law to settle the case after paying an amount as ordered by the CCI, while the commitment scheme enables CCI to accept commitments from businesses for change in their behaviour in order to avoid an investigation.

E-commerce has become a key area of CCI’s investigation and enforcement activities as the efficiency, reach and consumer choices offered by these platforms have made them popular even as conventional retail outlets regularly appeal to policy makers to have a penetrating gaze over e-commerce platforms for any anti-competitive practice.

To be sure, in 2020, the e-commerce giants had approached several lower courts against the CCI’s investigation that was launched that year, and the matter finally ended up in the Supreme Court. However, the apex court had ordered the platforms to face the probe. The subsequent investigation report of the DGI was sent to the CCI and the platforms this August.