The Karnataka High Court has stayed proceedings on the Competition Commission of India’s (CCI) investigations into Amazon and Flipkart. The court issued notice to the competition watchdog and granted an interim stay on the pleas filed by various sellers on the online platforms, who highlighted serious procedural errors by the CCI’s Director General (DG) in the handling of the ongoing probe into the e-commerce majors’ alleged violations of competition law.

The investigation report by the DG accused both Amazon and Flipkart of engaging in anti-competitive behaviours such as exclusive launches, deep discounting, and preferential treatment of certain sellers. 

However, a critical procedural flaw surfaced when it was discovered that the DG had reclassified certain involved sellers from “third parties” to “opposite parties” without seeking the mandatory approval from the CCI, a move that was argued to violate the Commission’s own regulations.

“The petitioners [sellers] argue that this action by the Director General is in violation of the established procedures and regulations, as the Director  General is required to obtain prior approval from the Commission before  altering the status of a party from a third party to an opposite party in the course of an investigation. Given these circumstances, the petitioners submit that the actions of the Director General, in contravention of the regulatory framework, warrant appropriate consideration and rectification by the Commission in accordance with the law”, noted the Order.

“By submitting the report classifying the petitioners [sellers] as opposite parties without the requisite permission, the Director General has acted beyond his authority, thereby violating both the procedural safeguards enshrined in the [Competition] Act and the regulations governing the conduct of investigations under the Competition Commission of India. This procedural lapse calls for rectification, and the report submitted by the Director General should be considered void to the extent it has contravened the statutory provisions and the Commission’s regulatory framework”, argued the sellers that included Appario.

The court has scheduled the next hearing for October 21, 2024, and in the interim, the High Court has stayed the probe.

Regulator for E-commerce

Amid the ongoing gridlock on the CCI probe against e-commerce players, the Confederation of All India Traders (CAIT) has intensified its push for regulatory reform in India’s e-commerce sector, calling for the creation of a specialised, separate and active regulator dedicated to overseeing digital retail platforms.

In a letter written on October 3 to Finance Minister Nirmala Sitharaman, the traders’ body expressed concerns that the Competition Commission of India (CCI) has failed to effectively regulate the monopolistic practices of e-commerce giants Amazon and Flipkart. CAIT highlighted that without targeted oversight, India’s retail landscape could be irrevocably damaged, leaving small and medium traders unable to compete.

CAIT accused the competition watchdog of dragging its feet despite mounting evidence against the e-commerce giants, allowing them to dominate India’s retail market at the expense of small and medium traders. The letter also accuses CCI officials of complicity in stalling the investigation

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