No prima facie evidence with CCI and HC to order probe: Flipkart tells SC

Topics Flipkart | CCI | Supreme Court

Walmart-owned Flipkart has appealed to the Supreme Court against a state court's decision that allowed an antitrust probe into the e-commerce firm and its rival Amazon to continue, according to multiple sources.

The Karnataka High Court last week upheld a single-judge order dismissing the pleas filed by Amazon and Flipkart. The e-commerce firms had challenged a probe initiated by the Competition Commission of India (CCI) for alleged competition law violations.

In its appeal to the Supreme Court, Flipkart has said there is no finding in the CCI order, the High Court’s order and the order passed by the Ld.Single Judge that prima facie there appears to be a violation of Section 3(4) of the Act, according to the industry sources and legal experts.

Flipkart submitted that  Section 26 (1) of the Act categorically requires CCI to form an opinion that there is a prima facie violation of the Act. It argued that this Hon’ble Court has itself stated in a catena of cases that the formation of a prima facie opinion of a violation of the Act is threshold requirement under Section 26 (1) of the Act.

The company argued that in the present case that there is no prima facie finding of violation of any provisions of the Act.

Flipkart has submitted that in passing the impugned order the High Court has failed to appreciate that the main issue before it as to whether CCI had complied with the threshold requirements prescribed by the Act prior for passing an order under Section 26 (1) of the Act. This includes the existence of an agreement which allegedly violates the provisions of Section 3 of the Act. The existence of prima facie finding of a violation of the provisions of the Act. A prima facie finding of an appreciable adverse effects on competition (AAEC) in the relevant market, in a case under Section 3(4) of the Act.

The company contended that in the present case none of these conditions have been complied.

Flipkart didn’t comment on this development.

Last week, a division bench of Justices Satish Chandra Sharma and Natraj Rangaswamy passed the order in a batch of appeals moved by the e-commerce firms against a June 11 order of a Single Judge of the High Court.

While dismissing the plea, the Bench held, “By no stretch of imagination can inquiry be quashed at this stage...Appellants should not be afraid of investigation of CCI...In the considered opinion of the Court, appeals filed by appellants are devoid of merit and deserved to be dismissed.”

Amazon had approached the Karnataka High Court against a CCI order which had called for a Director General (DG) investigation into allegations of anti-competitive conduct in the online sale of smartphones on its platform.

The informant before the CCI, Delhi Vyapar Mahasangh (DVM), the traders’ body, was justifying the CCI decision for a probe. DVM had alleged that these players were giving deep discounts on online sales of smartphones, and cherry-picking sellers. Other allegations included predatory pricing and exclusive partnerships. DVM is an affiliate of the trade body Confederation of All India Traders (CAIT). CAIT had welcomed the Court order.

CAIT had said that CCI found a prima facie case for investigation against Amazon and Flipkart for violating competition law and distorting the level playing field in January 2020. Amazon and Flipkart approached the Karnataka High Court in Feb 2020 and obtained a stay on the probe. The CCI approached the Supreme Court and the Supreme Court directed the Karnataka High Court to hear the matter.

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