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Karnataka High Court stays CCI probe into Amazon, Flipkart

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Karnataka High Court stays CCI probe into Amazon, Flipkart

Illustration: Rahul AwasthiIllustration: Rahul Awasthi
The Karnataka High Court on Friday stayed the Competition Commission of India’s (CCI) investigation into allegations of anti competitive behaviour by Amazon and its chief rival Flipkart for a period of eight weeks.

The interim order comes as a relief to both firms that had come under the competition watchdog’s scrutiny for allegedly having exclusive tie-ups with brands, influencing prices, offering deep discounting and having preferred sellers.

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

“While we welcome and respect the decision of the Hon’ble High Court of Karnataka, this is just a step in the legal process. We are confident about our compliance,” an Amazon spokesperson said.

Flipkart did not respond to email queries from ET until the time of going to the press. Lawyers representing both companies said that they would not like to be quoted by the press.

Amazon had moved the court on Monday arguing that the CCI’s order had been passed “without prima facie application of mind” and that the commission’s findings were “perverse, arbitrary and untenable in law”.

A Senior government official ET spoke to said that the CCI had already begun its investigation into the two companies since it had just 60 days to do so from the time the order was passed, noting that the commission would now have to halt its probe due to the HC’s order.

No notices seeking information with regard to the investigation have gone out to either Flipkart or Amazon, the official said, adding that Amazon’s petition to the court was preemptive in nature.

The CCI ordered the probe into the two e-commerce marketplaces after receiving evidence in the form of text messages and emails furnished by the Delhi Vyapar Mahasangh that alleged potentially anticompetitive business activities.

Amazon argued in front of the court that the evidence furnished by the court was not prima facie which is a requirement for the commission to launch an investigation on its under Section 26(1) of the Competition Act.

In its January order, the CCI had said that the “alleged exclusive arrangements, deep-discounting and preferential listing by the OPs are being used as an exclusionary tactic to foreclose competition and are resulting in an appreciable adverse effect on competition…”