Samsung moves High Court to extricate itself from Amazon, Flipkart anti-trust probe

Samsung

Samsung has moved the Punjab and Haryana High Court to challenge the legality of a 2022 search and seizure operation by the Competition Commission of India (CCI). During the raid on Appario Retail, an Amazon reseller, the CCI cloned the phones and data of three Samsung employees who were present on the premises. Samsung claims the seizure was illegal and has requested the court to bar the CCI from using any evidence gathered in the ongoing anti-trust probe involving e-commerce platforms, mobile manufacturers, and sellers, according to court documents accessed by Moneycontrol.

The case is part of a larger legal battle in which Samsung is seeking to halt the CCI investigation. The High Court has stayed the probe until rulings are made on Samsung’s and other related appeals filed across various high courts. Last week, the CCI approached the Supreme Court to transfer 24 similar petitions filed by different parties, including sellers on Amazon and Flipkart.

From the phones recovered from Samsung employees, the CCI reportedly obtained evidence of dealings between the electronics manufacturer and e-commerce platforms. This includes data on pricing, inventory, and product launch strategies, lawyers privy to the development said.

Queries sent to Samsung remained unanswered.

"Samsung employees have found themselves caught in the crossfire. This case is distinct from why the CCI is targeting e-commerce companies. The interim order secured by Samsung suggests that the outcome might lean in the company’s favour," a person privy to the development told Moneycontrol on the condition of anonymity.

The three Samsung employees present during the raid—Navneet Singh Nagi, Niket Shah, and Harbir Singh Chhabra—had their phones cloned, which Samsung alleges contained confidential and privileged company information.

“The entire search exercise undertaken by Respondent No. 2 is patently illegal, and any material collected therein should not be relied upon and should be promptly returned to the Petitioner,” Samsung stated in a court filing dated November 10.

The company has also raised concerns that the data seized may have been used to change Samsung’s status in the case from a ‘third party’ to an ‘opposite party.’ Initially, the CCI sought information from Samsung as a third party linked to the e-commerce platforms, but it now seeks to implead Samsung as an opposite party or OP in the case.

“It is humbly submitted that Respondent No. 2 should be prohibited from using or relying upon the data and information unlawfully collected during the search and seizure to retroactively classify the Petitioner as an OP. The Respondents must also be restrained from accessing, analyzing, or disclosing any material obtained through such improper processes,” Samsung added in its filing.

Samsung has further requested the court to prohibit the CCI from disclosing any data obtained during the raid. The company cited Section 57 of the Competition Act, which mandates that information collected by the CCI can only be disclosed with written consent from the enterprise involved.

“Such disclosures would infringe upon the fundamental rights of the individuals whose data was collected, thereby violating their fundamental right to privacy, as guaranteed under Article 21 of the Constitution,” Samsung stated.

In the months preceding the raid, Samsung had responded to multiple data requests from the CCI. In November 2021, the company provided details of its contractual arrangements with e-commerce platforms. In 2023, the CCI sought specifics about 15 Samsung handsets, including quantities sold and revenue generated. It also requested data on the contribution of 14 specific handset models to Samsung’s FY22 revenue, which the company supplied.

Samsung’s rival Vivo is also under scrutiny in the same case, along with sellers on Amazon and Flipkart. However, Vivo has not faced any evidence seizures, as none of its employees were present during the raids conducted in 2022. Vivo has filed its own writ petition in the Punjab and Haryana High Court.

Offline retailers accuse Samsung of being close to e-commerce platforms

Samsung, currently facing challenges with offline retailers, who have accused the company of favouring e-commerce platforms, adversely impacting their sales. Retailers have alleged that Samsung offers differential pricing between online and large-format stores, provides lower margins compared to Chinese competitors, and creates uncertainty regarding the availability of popular models.

The South Indian Organised Retailers Association (ORA) had even threatened, ahead of the recently concluded festive season, to approach the Competition Commission of India (CCI) and the Commerce Ministry against Samsung for allegedly allocating 100 percent of high-demand handset models to e-commerce platforms.

Adding to its woes, 2024 has been a difficult year for Samsung in India. The company has reportedly begun laying off employees across functions such as sales, marketing, and operations due to poor sales performance. Moneycontrol reported in September that as much as 30 percent of the workforce in these functions may be impacted.

Samsung’s volume and value market share in India have also hit their lowest levels in a decade, reflecting the growing challenges the South Korean company faces in one of its key markets.