SC rejects Amazon, Flipkart’s plea to stop CCI’s investigation into their alleged anti-competitive practices

Case details: Flipkart Internet (P.) Ltd. v. Competition Commission of India - [2021] 129 taxmann.com 103 (SC)

Judiciary and Counsel Details

• • Vineet Saran and Surya Kant, JJ.
  • Gopal Subramanium, Abhishek Manu Singhvi and Sajan Poovayya, Sr. Advs. Anand S. Pathak, Amit K. Mishra, Shashank Gautam, Ms. Sreemoyee Deb, Ms. Smriti Shah, Ms. Anubhuti Mishra, Nikhil Joy, Ms. Nidhi Sahay, Ms. Gunjan Richharia, Pavan Bhushan, Ms. Ujwala Uppaluri, Pratibhanu Singh Karola, Ms. Raksha Agarwal, Ms. Pallavi Shroff, Ms. Shweta Shroff, Ms. Manika Brar, Aashish Gupta, Yaman Verma, Chaitanya Safaya, Ms. Neetu Ahlawat, Ms. Nandita Chauhan, Shivang Singh, Apurv Jain, L. Nidhiram Sharma, Ms. Nisha Kaur Uberoi, Gautam Chawla, Akshay Nanda, Ms. Shambhvi Sinha, Ms. Aditi Khemani, Ms. Akrathi Shetty and Ishan Arora, Advs. S.S. Shroff and Shashank Manish, AOR’s for the Petitioner.
  • Harish B. Narasappa, Ankur Singh, Suhaas R. Shenoy, Shourya Bari, Abir Roy, Gautamaditya Sridhara, Ishaan Chakrabarti and Vivek Pandey, Advs. Tushar Mehta, SG Ms. Madhavi Divan, ASG Arjun Krishnan and T. Sundar Ramanathan, AOR’s for the Respondent.

The Supreme Court has rejected a plea filed by e-commerce giants Amazon and Flipkart that sought to stall CCI’s investigation into their business practices. The Apex Court stated that Amazon and Flipkart must face an inquiry by CCI for anti-competitive practices.

Earlier, the Karnataka High Court’s division bench had dismissed Amazon and Flipkart’s appeal against an order of Single Bench, which allowed CCI to undertake a preliminary inquiry into alleged anti-competitive activities.

Facts of the Case

Delhi Vyapar Mahasangh (DVM), an organization of retailers, submitted a plea with the Competition Commission of India (CCI) against the country’s two most prominent e-commerce players – Flipkart and Amazon.

The DVM alleged that Amazon and Flipkart were giving preferential treatment to selective vendors mainly in the launch of their smartphones. The DVM filed a complaint under Section 3 and Section 4 alleging that e-commerce entities were abusing their dominant positions through predatory pricing, deep discounting, and preferential listing ad promotion of private labels.

The CCI, prima facie, found merits in the complaint and ordered a probe into the alleged anti-competitive practices by Amazon and Flipkart. The CCI ruling was challenged in the Karnataka High Court, which issued an interim stay on the CCI order.

The CCI appealed against the judgment in the Supreme Court, but the SC declined to provide any relief, and the matter was remanded to the Karnataka high court. The High Court was asked to decide on CCI’s plea to probe into the alleged anti-competitive practices of the e-commerce titans within six weeks.

Dismissing the appeal filed by Flipkart and amazon, the High Court held that “ it would be unwise to prejudge the issues raised by the petitioners in these writ petitions at this stage and scuttle the investigation”.

High Court Held

The Karnataka High Court observed that “in a writ petition filed under Article 226 of the Constitution of India, seeking judicial review, the High Court can examine only the decision-making process with the exception namely the cases involving a violation of fundamental human rights. The law on the point is fairly well settled”.

On appeal, the Apex Court rejected the plea filed by e-commerce giants by stating that CCI could have directed an inquiry-based upon complaint made by informants if a prima facie case was in existence.