No prima facie evidence with CCI for probe, Amazon tells Karnataka HC

Amazon argued that it is just a marketplace entity and has no preferred sellers while it does not have exclusivity deals with brands

The counsel representing Amazon on Wednesday told the Karnataka High Court that the Competition Commission of India did not have prima facie evidence to order a probe against some of the e-commerce giant’s business practices. The matter has been listed for Thursday for further hearing.

Last month, the CCI had ordered an investigation against e-commmerce companies including Amazon and Flipkart based on a complaint filed by traders’ body Delhi Vyapar Mahasangh (DVM) which alleged that these players are giving deep discounts on online sales of smartphones, and cherry-picking sellers. Amazon on Monday had filed a writ petition in the Karnataka High Court pleading for an interim stay on the probe. 

Amazon, which was represented by senior advocate Gopal Subramanium's argued that it is just a marketplace entity and has no preferred sellers while it does not have exclusivity deals with brands. Arguing that the investigation is a complete abuse of the process of law, he said that the CCI’s informant (DVM) is an affiliate of Confederation of All India Traders (CAIT) that had previously levelled similar accusations on it which did not stand in the court of law. 

CAIT on Wednesday said that it has moved an application for impleadment in the case. It said that Amazon has made CCI, DVM and Flipkart Internet Services (P) Ltd. as respondents. 

CAIT also alleged that what Amazon’s legal counsel is trying to mislead the court by saying that the company does not have any preferred sellers. “Not only did Amazon make frivolous claims of not engaging in business malpractices and FDI (foreign direct investment) violations by stating that they do not enter into any Preferential Seller agreements and do not control any inventory but they also tried their best to misdirect the Court by saying that it is a witch-hunt led by CAIT to malign Amazon,” Praveen Khandelwal, Secretary General, CAIT said in a statement.  

Khandelwal said it’s quite evident and clear that Amazon has violated and flouted India’s FDI and anti-competitive laws openly by indulging in predatory pricing and deep discounting. “When they have openly been saying that they are fully compliant to all laws, let there be an investigation. The very effort to stop the investigation is a testimony to their unethical practices,” alleged Khandelwal. 

The investigation ordered by the CCI covers Amazon and rival Flipkart which is now owned by Walmart. Amazon had asked the court that an interim stay be granted on the proceedings, or else a probe would cause “irreparable loss and injury” to the e-commerce player’s “reputation/goodwill”. 

In its petition, the company has stated that the CCI order “has been passed without prima facie application of mind and will cause serious prejudice to the petitioner (Amazon). Its findings are perverse, arbitrary, untenable in law”.

Amazon has filed a “Writ of Certiorari” under Article 226 of the Constitution, by which there can be a judicial review of a decision of a lower court or an administrative agency. The company decided to file the petition in the Karnataka High Court since Amazon India’s registered office is located in Bengaluru.

In the past, the CCI, after studying deep discounts in e-commerce, had said it was not a matter of competition. 

India’s e-commerce market is estimated at around $40 billion, and makes for less than 10 per cent of the overall retail pie, which is estimated at close to $700 billion.