Bengaluru: In a major blow to e-commerce giants Amazon and Flipkart, the Karnataka High Court has dismissed their plea to quash an anti-trust investigation by the Competition Commission of India (CCI).
Consequently, both the companies will face investigation under Section 3 of Competition Act.
In January last year, the fair market watchdog had ordered an enquiry into the operations of both Amazon and Flipkart on multiple counts, including deep discounts and exclusive tie-up with preferred sellers.
In its order, CCI had said that it needs to be investigated whether the alleged exclusive arrangements, deep discounting and preferential listing by Amazon and Flipkart are being used as an exclusionary tactic to foreclose competition.
Also, the anti-trust body had added that it needs to be seen if such practices are resulting in an appreciable adverse effect on competition, contravening the provisions of Section 3 (1) read with Section 3(4) of the Competition Act.
“In view of the foregoing, the Commission is of the opinion that there exists a prima facie case which requires an investigation by the Director General (DG), to determine whether the conduct of the OPs (Amazon and Flipkart) have resulted in contravention of the provisions of Section 3(1) of the Act read with Section 3(4) thereof, as detailed in this order,” the CCI order had said.
Commenting on the High Court decision, the Confederation of All India Traders (CAIT) said: “It fully vindicates the stand of CAIT that Amazon and Flipkart business model is entirely based on violating the FDI policy, rules and other laws and therefore without wasting any more time, the CCI should immediately begin its probe.”
