Hearing into Amazon's petition against CCI probe to continue on third day

Amazon logo on the facade of one of their office buildings located in Silicon Valley, San Francisco bay area | Photo: Shutterstock
The hearing into the petition filed by Amazon seeking an interim stay on the Competition Commission of India (CCI) probe against it will continue for the third consecutive day on Friday as well as legal counsels of the competition watchdog and Delhi Vyapar Mahasangh (DVM) cornered the ecommerce giant justifying the CCI decision. The matter is being heard by Justice PS Dinesh Kumar of the Karnataka High Court.  

The CCI represented by its legal counsels told the Court on Thursday that it is the duty of the watchdog to ensure that there are no practices that have an adverse effect on the competition. Senior lawyer Harish Narasappa, appearing for CCI, told the court that the arguments made by Amazon’s counsel on Wednesday were like building a ‘fantastic castle’ but it won’t survive.

Arguing against the CCI order on Wednesday, Amazon’s counsel Gopal Subramanium had told the court that the CCI did not have prima facie evidence to order a probe his client’s business practices.

Narasappa on Thursday strongly objected to the jurisdiction point raised by Amazon and said that writ petition filed under Article 226 of the Indian Constitution does not intervene in the investigations of the CCI Director General as directed by the competition watchdog. He read out the Consolidated FDI (foreign direct investment) Policy 2017 and referred to points 3.7 and 3.7.1 of the policy which states that merely satisfying FDI does not exempt anyone from other laws of land. FDI policy reflects only sources of inflow of money into the country, he argued. The impugned order of CCI does not question the FDI policy as it is only concerned with practices carried on by the petitioner Amazon, the CCI counsel said.

He also referred various cases to state that a petition filed before the court under Sec 226 of the Constitution cannot influence the order passed under section 26 (1) of the Competition Act, and further 26 (1) does not create any civil consequences. Narasappa also said that in the previous argument by the petitioner, section 26 (2) was read and mentioned about appealable orders, but in this case the Court needs to refer to section 26 (1). Sec 26 (1) of the Competition Act states that investigation can be ordered if prima facie case exists.

The CCI had ordered an investigation against e-commerce companies including Amazon and Flipkart based on a complaint filed by DVM which alleged that these players are giving deep discounts on online sales of smartphones, and cherry-picking sellers. Amazon in its petition has made CCI, DVM and Flipkart as respondents.

The counsels of Flipkart and the Confederation of All India Traders (CAIT) have sought times to put forth their arguments before the court on Friday. The counsels representing CAIT told the court on Thursday that the informant DVM is one of its affiliates.

Senior Counsel K G Raghavan who appeared on behalf of DVM argued that issues of FDI violations and the Competition Law violations can be looked at by the respective authorities without the CCI having to wait for the investigation by ED into Amazon/Flipkart's alleged FDI violations.

The CCI has ordered the investigation under the powers vested on it by virtue of Competition Law and there cannot be overlapped by different statutes. Therefore, the petition of the Amazon has no merit and ground, and it needs to be rejected, Raghavan argued. Giving examples on how Amazon is promoting the sellers where it owns a stake, Raghavan said the relationship between the petitioner (Amazon) and preferred sellers on its platform such as Cloudtail and Appario are like the “tentacles of the octopus” and “this has to be deciphered by the investigation”.

Cloudtail is a joint venture between Amazon and Catamaran Ventures which is owned by Infosys founder N R Narayana Murthy. Appario is a subsidiary of Frontizo which is a JV between Amazon and Patni Group.  

Other Advocates who represented DVM included Abir Roy and Ishaan Chakrabarti.

Regarding Thursday’s proceedings, CAIT Secretary General Praveen Khandelwal said that Amazon is making a futile attempt to stay the process of the law without any merit. “We have full trust and confidence on the Judiciary which will take note of the fact that Amazon merely attempting to derail the investigation of CCI,” he said.

Day’s highlights
  • CCI, DVM lawyers strongly defended CCI investigation, on Thursday
  • DVM says, relationship between ecommerce players and preferred sellers as like ‘tentacles of octopus’  
  • CAIT makes surprise appearance through its legal counsel to aid affiliate DVM
  • Court to see arguments of Flipkart and CAIT counsels on Friday

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