Flipkart And Amazon Are Challenging India Court’s Order On Antitrust Investigation

Flipkart has filed a legal challenge against the Indian court's decision to reopen an antitrust investigation into its business practices on 16 June. Along with the Walmart owned homegrown company, the e-commerce giant Amazon has also challenged the court order.

Flipkart's appeal claims that the Karnataka court's decision to allow the investigation to resume was erroneous and that it should be put on hold. The latest filing, which was not made public but accessed by Reuters, stated that "irreparable injury will be caused to the appellant if the investigation was to continue pending the present appeal".

In January 2020, the Competition Commission of India (CCI) launched an investigation after receiving a complaint stating that both the companies favoured some sellers on their platforms and that deep discounts hampered competition. But at that time Flipkart and Amazon both denied any wrongdoing and their almost immediate legal objections halted the investigation for more than a year until it was permitted to begin last week when a court dismissed arguments that the CCI lacked evidence.

People familiar with the matter said that like Flipkart’s latest filing, a similar challenge has been undertaken by Amazon, which is under the threat of facing a $425 million fine in Europe for allegedly violating privacy laws. As reported, both cases are expected to be heard this week by a two-judge panel.

However, the report also added that the CCI sought to speed up the inquiry as it increased its examination of big-tech corporations. A source said that the CCI intends to demand information from Flipkart and Amazon regarding the allegations as soon as feasible—as these types of investigations usually take several months to complete.

Both Amazon and Flipkart are presently defending themselves against charges from offline merchants that their complicated company structures allow them to skirt e-commerce foreign investment regulations.

Several lobbying groups, including the Confederation of All India Traders (CAIT) and the All India Online Vendors Association (AIOVA), have accused these e-commerce behemoths of eroding their businesses through predatory policies, huge discounts and other business malpractices. The companies have also been accused of breaking the Foreign Direct Investment (FDI) policy, the Foreign Exchange Management Act (FEMA) and avoiding paying taxes to the government, according to the groups.

Similar violations by Amazon were revealed in another report by Reuters which was published in February 2021. It noted that Amazon's indirect investments in two sellers—Cloudtail and Appario—accounted for about 35 per cent of the company's revenue through sales in 2019. Only 35 vendors on Amazon accounted for almost two-thirds of total sales. This suggested a violation of Press Note 2 of the FDI regulations, which prohibits e-commerce firms from giving some merchants special treatment.

In December 2020, Praveen Khandelwal, the Confederation of All India Traders (CAIT) secretary-general told The Print, the Department of Promotion of Industries and Internal Trade (DPIIT) has written to the Reserve Bank of India (RBI) and the Enforcement Directorate (ED), to take "required action" against Amazon and Flipkart in response to complaints made by the trade group to Union Commerce Minister Piyush Goyal.