Amazon, Flipkart vs CCI: CCI is well within its rights to probe Amazon, Flipkart, it tells Karnataka HC

The government had directed the ED and the RBI to take action against Amazon and Flipkart last year.

The Competition Commission of India (CCI) is willing to close the matter following a report by the director general, but it is well within its rights to conduct an enquiry, it told Karnataka High Court on March 16.

It added that even as there are matters pertaining to Amazon and Flipkart being heard at other jurisdictions, it doesn't stop the CCI from making its enquiry.

"Given the growth of the market, the fast moving nature of the market, one has to act quickly. We may even close the case. We don't even know what we will find after the DG's report. We will apply our mind afresh, but where in the world at least an enquiry is prevented like this..," said Madhavi Divan, Additional Solicitor General (ASG), appearing for the CCI, before Justice PS Dinesh Kumar.

She was referring to the growth the online retailers have witnessed following the pandemic.

Citing the difference between  Foreign Exchange Management Act and the Competition Act, Divan said the two follow different procedures and standards. "Under FEMA it is much more stringent regime in terms of hearing, show cause notice etc and standard of adjudication is also much more onerous and stringent. If we were to apply the same thing to the Competition Act, where you are supposed to do everything in a very time bound fashion. If we have to wait ... then we can be rest assured that competition would vanish at least in the limited area that we are concerned," she said.

The submission was made during the hearing of the challenge to the CCI order which sought an investigation into alleged anti-competitive practices by Amazon and Flipkart last year.

Last year, following complaints from the Confederation of All India Traders for violation of the FDI policy and the Foreign Exchange Management Act (FEMA), the government directed the Enforcement Directorate and the Reserve Bank of India to take necessary action against Amazon and Walmart-owned-Flipkart.

"If we are to wait for all this to happen, the ED investigation is pending, under FEMA there would be an adjudication... that this is their case. We cannot afford to wait like this," she said.

While appearing for Amazon, Senior Advocate Gopal Subramanium had said the CCI's probe into Amazon is a violation of the Competition Act.

Both Amazon and Flipkart have made submissions challenging the CCI's orders.

The development comes as the government is working on a policy for the e-commerce sector. The first copy of the draft has already created a lot of murmur in the ecosystem with leading companies calling it unfavourable.

The draft, a copy of which has been seen by Moneycontrol says e-commerce companies will offer equal treatment to all sellers who sell on their platforms. This in a way would hamper the preferential treatment model run by the marketplaces in India.

The hearing will continue on March 17.