(MENAFN- Live Mint) The Supreme Court (SC) on Monday said the Karnataka High Court will hear the challenges against the Competition Commission of India's (CCI) probe into e-commerce giants Amazon and Flipkart's alleged anti-competitive practices.
This interim decision came after attorney general of India R. Venkataramani, representing CCI, informed the apex court that the competition regulator had agreed with the court's suggestion to transfer the cases to the Karnataka High Court.
However, the top court chose not to pass a final order yet, stating that its views were only prima facie and kept its final order pending until 6 January, after more petitions were filed and needed to be accommodated into the case. The court also restrained the Karnataka High Court from proceeding in the case until a final order is made on 6 January.
Also read | Supreme Court denies special treatment to CCI over Amazon, Flipkart probe, refuses to transfer petitions
“Parties represented today should take notice. We permit the petitioner (CCI) to add parties. An amended cause title shall be filed within two days. Notices will be made returnable on January 6. Meanwhile, the writ petitions heard by the Karnataka High Court shall not proceed. Prima facie, we are of the view that all cases pending across various jurisdictions should be transferred to the Karnataka High Court,” the Supreme Court said.
A bench of justices Abhay S. Oka and Manmohan was hearing CCI's plea seeking the consolidation of all petitions challenging its probe against Amazon and Flipkart, and their transfer to a single high court. The plea was filed against Amazon-owned e-commerce entity Cloudtail India Pvt. Ltd and others.
These companies have filed writ petitions in various high courts, challenging CCI's antitrust probe against the two e-commerce giants, which was later expanded to include the sellers as well.
During the last day of the hearing on 13 December in the SC, disagreements arose between the competition regulator and e-commerce sellers over which high court should hear the case.
Attorney general Venkataramani argued that the Delhi High Court should handle all the petitions, while the sellers, represented by senior counsels Abhishek Manu Singhvi and Mukul Rohatgi, suggested that the Karnataka High Court should continue handling the case as it had been doing so far.
The attorney general explained that they wanted the Karnataka High Court to complete the pending case, and once that was done, the remaining petitions in other high courts should be transferred to the Delhi High Court.
Also read | Multiple writ petitions by e-commerce players aim curtailing regulator's powers: CCI tells SC
However, the Supreme Court rejected this suggestion by CCI, stating that it would set a dangerous precedent, and asked the attorney general to seek clear instructions on whether it agrees upon transferring the cases to Karnataka High Court, which CCI subsequently agreed to.
During the proceedings, the accused Amazon and Flipkart of effectively“riding on the back” of the sellers to challenge the investigation by filing petitions across the country. The e-commerce sellers accused CCI of forum-shopping.
In its plea, CCI sought to transfer 24 writ petitions filed by Amazon, Flipkart and their vendors from various high courts across the country to the Delhi High Court. This move was aimed at avoiding the multiplicity of proceedings.
Case history
The writ petitions stemmed from CCI's 2020 order under Section 26(1) of the Competition Act, which directed the director general to investigate allegations against Amazon and Flipkart. CCI believes that the writ petitions filed by the sellers are an attempt to restrict its investigative powers. However, the sellers contend that their status as“third parties” when CCI started its probe into Amazon and Flipkart's alleged anti-competitive practices was changed to“opposite parties” in July 2024, based on the director general's investigation, without any prior notice or hearing.
CCI argued that the writ petitions were an attempt to scuttle the investigation process. If allowed, these writ petitions could interfere with the director general's ability to conduct investigations and potentially limit the director general's ability to investigate other parties despite finding solid evidence. Two dozen online sellers on Amazon and Flipkart had filed writ petitions in various high courts, challenging CCI's antitrust probe against the e-commerce giants. The high courts of Karnataka, Punjab and Haryana, and Madras had granted stays on CCI's proceedings in favour of the companies.
The case against Amazon and Flipkart was triggered by a 2019 complaint by the Delhi Vyapar Mahasangh, affiliated with the Confederation of All India Traders, accusing the online marketplaces of favouring specific sellers. On 13 January 2020, CCI launched a formal probe into the companies for alleged anti-competitive practices, focusing on exclusive arrangements, deep discounting and preferential product listings. CCI directed the director general to assess whether these actions involved exclusionary tactics that distorted competition.
In February 2020, the Karnataka High Court temporarily paused the investigation after Amazon and Flipkart challenged CCI's authority. By June 2021, the court allowed the investigation to resume and the companies sought relief from the Supreme Court. Their pleas were dismissed in August 2021, clearing the way for the probe to continue.
Also read | CCI enlists attorney general R Venkataramani to clear path for Amazon, Flipkart antitrust probes
In August 2024, the CCI director general submitted a detailed report revealing that major smartphone manufacturers like Xiaomi, Samsung, OnePlus, Realme and Motorola were launching products exclusively on Amazon and Flipkart. The investigation found that these platforms prioritized certain sellers in search results, disadvantaging others and creating a marketplace where only preferred sellers thrived. The report emphasized the significant market impact, as nearly 50% of smartphone sales in India occurred online in 2023, with Flipkart holding a 55% market share and Amazon 35%. CCI also found that both the companies used foreign investments to provide discounted services exclusively to select sellers, raising concerns about compliance with foreign direct investment (FDI) rules and suggesting efforts to mitigate accusations of exclusive launches and deep discounts.
This led Amazon and the sellers to begin approaching high courts with writ petitions to stay the probe. One writ plea was filed before the Karnataka High Court. Appario Retail, formerly the largest seller on Amazon India, filed a writ petition in the Karnataka High Court seeking to quash CCI's investigation. On 27 September, the Karnataka High Court halted the proceedings after considering Appario's arguments. The court highlighted procedural lapses in CCI's investigation, including the director general's reclassification of certain entities from 'third parties' to 'opposite parties' without proper approval. This reclassification exceeded the director general's authority, violating procedural safeguards, prompting the interim stay.
This led CCI to approach the Supreme Court, resulting in the current deliberations.
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