The order refers to the Division Bench of Bombay High Court in Star India Pvt.Ltd. which held that CCI ought to have formed a prima facie opinion that there exists an agreement between the parties. In the case on hand, what is recorded is CCI’s inference that there ‘appears’ to exist an agreement without there being any material on record, says the order.
The order noted that the petitioner which is Amazon
had submitted that it is carrying on the business under the ‘marketplace model’. It also says during 2018, a complaint was lodged by the All India Online Vendors Association (AIOVA) to the CCI against respondent no.3 (Flipkart). Though the petitioner (Amazon) was not named in the complaint, it was invited to participate in the proceedings by the CCI to help explain the nuances of the e-commerce business. In the said proceedings, respondent no.3 (Flipkart), as well as the petitioner (Amazon), had been absolved of violation of Section 4 of the Competition Act. The order says the legal counsel of the petitioner pointed out that in this case, the complainant has annexed a portion of the copy of said order to the complaint. However, the CCI has not chosen to issue a notice to the petitioner to put forth its case. “This assumes significance,” says the order.
The order noted that in the writ petition filed by the Telecom Watchdog before the Delhi High Court against Directorate of Enforcement, Flipkart
and the petitioner (Amazon), a direction was sought against the Directorate of Enforcement to investigate into the FDI (foreign direct investment) violations by petitioner through companies
such as Prione Business Services. The said writ petition has been disposed of by the Delhi High Court.
Cloudtail, one of the largest sellers on Amazon India, is owned by Prione Business Services, which is a JV between Amazon and Infosys co-founder N R Narayana Murthy’s Catamaran Ventures. Also, another seller, Appario Retail is a subsidiary of Frontizo, which is a JV between Amazon and Patni Group.
The order says that Flipkart submitted that jurisdiction of High Court under Article 226 of the Constitution of India has been upheld by the Hon’ble Supreme Court in the case of Bharti Airtel Limited. Unless a prima facie case is made out, investigation under Section 26(1) of the Competition Act cannot be ordered. The impugned order does not disclose jurisdictional facts and satisfaction of CCI with regard to the prima facie case.
The legal counsel of the CCI defending the impugned order submitted that all that the Commission has directed is to conduct an investigation by the Director General. CCI, after a careful examination of records, has opined that there exists a prima facie case against petitioner and recorded that there appears to be an exclusive partnership between smartphone manufacturers and e-commerce platforms. This adversely affects e-commerce business in the entire country. Therefore, the investigation order is just and appropriate, the CCI had submitted.
The order says though elaborate arguments were addressed, it was requested by learned Senior advocates on both sides that since counter affidavits have not been filed on behalf of respondents, the matter may be heard for the preliminary hearing and interim order.
The contention urged on behalf of the petitioner that CCI has imagined the existence of ‘some agreement’ merits consideration, says the order. The court has granted the respondents eight weeks to file a counter.