Now, Flipkart challenges India anti-trust probe after Amazon gets stay

E-commerce firm Flipkart has filed a writ petition in the Karnataka High Court challenging the Competition Commission of India’s (CCI’s) order on probing some of its business practices. The move comes just a week after Amazon secured an interim stay on the probe from the high court.

The CCI ordered an investigation against e-commerce players last month after the Delhi Vyapar Mahasangh, a traders’ body, filed a complaint against the firms’ practices like giving deep discounts on online sales of smartphones and cherry-picking sellers.

The investigation covered Flipkart and Amazon. In its writ petition, Amazon had made the CCI, DVM and Flipkart respondents. After hearing the case for three consecutive days, the court granted an interim stay on the investigation.

In its petition, Flipkart is also expecting to get a similar “stay order”, according to the sources.

“Flipkart is challenging the same CCI order, which was also opposed by Amazon last week. Though the order has been stayed, Flipkart had not challenged it technically,” said a person with knowledge about Flipkart’s writ petition. “It would be a very short hearing because the court has already taken a view on the matter and there might be a hearing soon,” said the person.

According to legal experts, Flipkart had to file the petition as it was one of the respondents in the one filed by Amazon and its legal counsel had also argued against the CCI’s order. “The  Karnataka High Court has issued an interim stay of the CCI probe. We are a party to the CCI order and a respondent in Amazon’s writ against the order,” said a Flipkart spokesperson. “Given this position and the high court Stay, as a procedural matter, we are filing a writ,” the spokesperson said.

According to sources, Flipkart’s main contention revolves around Section 19 (3) of the Competition Act, which stipulates six parameters that the competition watchdog needs to consider while evaluating if a firm has flouted norms. These include creation of barriers to new entrants, driving existing competitors out of the market, and improvements in production or distribution of goods or provision of services. Flipkart’s petition talks about how some of those parameters were not considered by the CCI while ordering for a probe, according to sources.

“In the Amazon vs CCI hearing last week, Flipkart pointed out the legality of the CCI’s probe order and by filing this petition, it is reinforcing that,” said a person familiar with the development. The HC found no merit in CCI’s order. According to an analysis of the order, the CCI did not follow set norms for such matters. The order says Flipkart submitted that jurisdiction of the high court under Article 226 of the Constitution was upheld by the Supreme Court in the Bharti Airtel case.

Unless a prima facie case is made out, investigation under section 26(1) of the Competition Act cannot be ordered. The impugned order does not disclose jurisdictional facts and satisfaction of the CCI with regard to the prima facie case, they said.

The story so far

Flipkart’s petition in Karnataka High Court revolves around the Competition Commission of India not following the norms set for such matters

Its rival Amazon had filed a petition for the same order and was granted a stay

The Karnataka HC has prima facie not found merit in the CCI’s order

The court has granted the respondents eight weeks to file a counter

Trade body CAIT says the petition by Flipkart meant these firms are scared of the government investigation