NCLAT asks CCI to probe against Flipkart over alleged unfair practices

The National Company Law Appellate Tribunal (NCLAT) on Wednesday asked fair trade regulator CCI to initiate again the probe against e-commerce major Flipkart for an alleged use of its dominant position.       

A three-member Bench of the NCLAT headed by Chairman Justice S J Mukhopadhaya has set aside the earlier order passed by the Competition Commission of India (CCI) in this regard.

 Earlier, the CCI had absolved e-commerce major Flipkart of unfair practices using its dominant position. The appellate tribunal has directed the CCI to ask its probe arm Director General (DG) to investigate into the allegations. 

“We set aside the order passed by CCI...,” the bench said adding that the fair trade regulator “is directed to initiate probe against Flipkart”. The NCLAT said that the All India Online Vendors Association (AIOVA) has successfully made its case here. While, Flipkart said it was waiting for the copy of the order passed by the NCLAT.

“We understand that the NCLAT has issued an order in relation to the AIOVA appeal. We are currently awaiting a copy of the order,” a Flipkart spokesperson said.

In November 2018, the AIOVA had approached the CCI alleging abuse of market dominance by e-commerce major. The AIOVA had alleged abuse of market dominance against Flipkart India Pvt Ltd, which is into wholesale trading/distribution of books, mobiles, computers and related accessories, and e-commerce marketplace Flipkart Internet Pvt Ltd.

It had alleged that small vendors have become allies of the big vendors and suppliers to leading sellers such as Cloudtail, WS Retail, etc on the Flipkart and Amazon platforms, rather than selling directly to consumers through the online e-commerce marketplace sites.

However, passing an order on November 6, 2018, the CCI had held that the business practices of Flipkart and Amazon are not in violation of competition norms and rejected allegations of abuse of market dominance made by the AIOVA. The CCI had ruled that looking at the present market construct and structure of online marketplace platforms in India, “it does not appear that any one player in the market is commanding any dominant position at this stage of evolution of market”. The AIOVA, as mentioned in the CCI order, is a group of over 2,000 sellers selling on e-commerce marketplaces such as Flipkart, Amazon, Snapdeal etc.

Earlier in February, in a different matter, the High Court of Karnataka had stayed the CCI investigation into allegations of anti-competitive behaviour by two e-retailing majors Amazon and Flipkart for a period of eight weeks.

The CCI had ordered a probe into Amazon Seller Services and Flipkart Internet, units of the two e-commerce marketplaces, on January 13 after receiving complaints from trader body Delhi Vyapar Mahasangh.