A division bench of the Karnataka High Court has rejected the Flipkart and Amazon appeal against a Competition Commission Of India (CCI) investigation into them and directed them to face the inquiry. The bench said, “by no stretch of imagination can the inquiry be quashed at this stage.”
This order came after Amazon and Flipkart filed appeals in June 2021, against the Karnataka High Court’s earlier order allowing CCI investigation on alleged anti-competitive practices of the two e-commerce majors. The CCI investigation was ordered in response to a case filed by the Delhi Vyapar Mahasangh (an association of small retailers).
Commenting on the order, BC Bhartia, National President, and Praveen Khandelwal, Secretary-General of the Confederation of All India Traders (CAIT) said, “It fully vindicates the stand of CAIT that the Amazon and Flipkart business model is entirely based on violating the FDI policy, rules, and other laws.Therefore, without wasting any more time, the CCI should immediately begin its probe.”
Small retailers have always criticised e-commerce companies like Amazon and Flipkart for deep discounting practices and favouring sellers like Cloutail and Appario, in which they own a stake. Just last week, an online seller's association, Indian Sellers Collective, urged Narayana Murthy to cut ties with Amazon’s largest seller, Cloudtail.
In response to these long-standing concerns, The Department for Promotion of Industry and Internal Trade (DPIIT) had released a Press Note 2 in 2018. This note had restricted e-commerce marketplaces like Amazon and Flipkart from having more than 25 per cent stake in online vendors. But the sellers have since claimed that while these e-commerce majors are compliant with the FDI regulation on paper, this is not the case in reality.
The government is also working on finalising its e-commerce policy draft, which proposed to increase scrutiny around the operation of e-commerce companies and mandated them to appoint India-based grievance redressal teams. It also proposed that companies should add a country of origin filter to sort indigenous sellers, among other things. The draft was open to public consultations till July 21, 2021.