Our duty is to ensure fair competition, CCI tells Karnataka High Court

DVM counsel calls relationship between Amazon and sellers 'tentacles of octopus'

Counsel for the Competition Commission of India (CCI) and Delhi Vyapar Mahasangh (DVM) on Thursday defended the watchdog’s order to initiate a probe against e-commerce firms, including Amazon and Flipkart, in the Karnataka High Court. Amazon had moved high court challenging CCI’s order.

 

The matter pertains to a complaint filed by DVM, which alleged that these players were giving deep discounts on online sales of smartphones, and cherry-picking sellers. In its petition, Amazon made CCI, DVM and Flipkart respondents.

 

Senior lawyer Harish Narasappa, appearing for CCI, told the court that it was the watchdog’s duty to ensure that there were no practices that had an adverse effect on competition. Narasappa said the arguments made by Amazon’s counsel on Wednesday were like building a “fantastic castle”, but it won’t survive. Arguing against the CCI order on Wednesday, Amazon’s counsel Gopal Subramanium told the court that the CCI did not have prima facie evidence to order a probe into his client’s business practices.

 

Narasappa on Thursday objected to the jurisdiction point and said that writ petition filed under Article 226 of the Indian Constitution does not intervene in the investigations of the CCI director general as directed by the competition watchdog. He quoted from the Consolidated FDI (foreign direct investment) Policy, 2017, saying that merely satisfying FDI norms did not exempt anyone from other laws of land.

 

Senior Counsel KG Raghavan, who appeared for DVM, argued that violations of FDI norms and competition law can be looked at by the respective authorities without the CCI having to wait for the investigation by the Enforcement Directorate.

 

He said Amazon’s petition had no merit and needs to be rejected. Giving examples of how Amazon was promoting seller firms, where it owned a stake, Raghavan said the relationship between Amazon and preferred sellers on its platform such as Cloudtail and Appario were like the “tentacles of the octopus” and “this has to be deciphered by the investigation”.

 

Narasappa also referred various cases to state that a petition filed before the court under Section 226 of the Constitution cannot influence the order passed under section 26 (1) of the Competition Act, which states that investigation can be ordered if prima facie case exists. Cloudtail is a joint venture between Amazon and Catamaran Ventures, which is owned by Infosys founder NR Narayana Murthy. Appario is a subsidiary of Frontizo, which is a joint venture between Amazon and Patni Group.