Flipkart challenges Karnataka HC judgement in division bench, Amazon tags along

Amazon's counsel also asked for his matter to be tagged along with Flipkart's appeal.

Walmart-owned Flipkart has challenged the last week's judgement of the Karnataka High Court allowing the Competition Commission of India (CCI) to continue its investigation against the company in a division bench. Amazon's counsel also asked for his matter to be tagged along with Flipkart's appeal. The request has been accepted.

"This is urgent for them otherwise CCI can take action against them. They need a stay order to halt the investigation. The request for the matter is to be heard tomorrow," said a person privy to the development.

On June 11, the Karnataka High Court dismissed the writ petition of Amazon and Flipkart thus allowing the CCI to continue with its probe.

The issue started almost 18 months ago when the Delhi Vyapar Mahasangh (DVM), a group representing small and medium business owners in the national capital, submitted a plea with CCI against the country's two biggest e-commerce players, accusing them of anti-competitive practices, predatory pricing and preferential treatment of sellers among others.

DVM filed the complaints under Sections 3 and 4 of the Competition Act.

The CCI passed an order in January 2020 based on the information submitted by DVM under Section 3, directing the director-general to conduct a probe.

This order was challenged by Amazon through a writ petition in the Karnataka High Court in February 2020. The high court put the CCI’s investigation on hold the same month.

Meanwhile the Confederation of All India Traders (CAIT) said it is ready to contest the petition in the court.

"Undoubtedly we are going to contest it. We are just waiting for the copy of the petition. We will go through the contents to see on what grounds have they filed it," said Praveen Khandelwal, National secretary general of CAIT.

"Irreparable injury will be caused to the appellant if the investigation was to continue pending the present appeal," the Flipkart filing, which was not made public but has been viewed by Reuters, said. It also urged the court to quash the initial CCI order for the investigation.

Amazon has mounted a similar challenge, two sources familiar with the matter said. Both are likely to be heard by a two-judge panel this week, sources said.

Flipkart and CCI did not immediately respond to Reuters' requests for comment. Amazon declined to comment on its appeal.

Sources told Reuters this week that the CCI planned to speed up the investigation as it increases its scrutiny of big-tech firms. The CCI plans to demand information from Flipkart and Amazon on the accusations "as quickly as possible", one source said. Such investigations usually run several months.

Flipkart's consel in its petition told the court that "Irreparable injury will be caused" to the company if the investigation was to continue pending the present appeal.

"This is a fit case of grant of interim relief and stay on the impugned order, given that there has been a stay on the CCI order since 16 months and no prejudice will be caused if the investigation continues to remain stayed," the petition reads.

Moneycontrol has seen a copy of the petition.

In September 2020, CCI challenged the interim order in the Supreme Court. Justice Nageswara Rao sent the case back to the High Court, saying the case be heard as soon as possible in October 2020.

After months of hearings, the Karnataka High Court had passed its judgement in the favour of CCI.

All this while, Amazon and Flipkart have been categorically denying any wrongdoing.

In February, a Reuters investigation based on Amazon documents showed it hadgiven preferential treatment for years to a small group of sellers on its Indian platform. Amazon has said it "does not give preferential treatment to any seller".