CCI to continue its probe against Amazon, Flipkart

CCI INVESTIGATION TO CONTINUE

The judgement which was pronounced by Justice PS Dinesh Kumar, single judge, Karnataka High Court allows CCI to continue its investigation against the two marketplaces under Section 3 of the Competition Act which deals with anti-competitive agreements.

The court said Petitioners have pleaded in extenso and submitted elaborate arguments on the merits of the matter.

But, in a writ petition filed under Article 226 of the Constitution of India, seeking judicial review, the High Court can examine only the decision making process with the exception namely the cases involving a violation of fundamental human rights. The law on the point is fairly well settled.

In T.C. Basappa Vs. T. Nagappa and Another [AIR 1954 SC 440], it is held that a tribunal may be competent to enter upon an enquiry but in making the enquiry it may act in flagrant disregard of the rules of procedure or where no particular procedure is prescribed, it may violate the principles of natural justice. A writ of certiorari may be available in such cases. An error in the decision or determination itself may also be amenable to a writ of certiorari but it must be a manifest error apparent on the face of the proceedings, e.g. when it is based on clear ignorance or disregard of the provisions of law.

In other words, it is a patent error that can be corrected by certiorari but not a mere wrong decision.

It is expected that an order directing investigation be supported by ‘some reasoning’ (CCI Vs. SAIL para 97), which the Commission has fulfilled.

Therefore, it would be unwise to prejudge the issues raised by the petitioners in these writ petitions at this stage and scuttle the investigation. Therefore, the impugned order does not call for any interference.

The Hon’ble Supreme Court of India has held in Samir Agrawal Vs. Competition Commission of India [2020 SCC Online 1024], that Competition Act operates in ‘rem’ and not in ‘personam’, since it concerns public interest. Placing reliance on Cadila Healthcare Limited and Anr Vs. CCI [2018 SCC OnLine Del 11229 (paragraph 59)], she submitted that the CCI or an expert body should ordinarily not be crippled or hamstrung in their efforts by application of technical rules of procedure.

DIMENSIONS OF ARGUMENT

Gopal Subramanium, senior advocate appearing for Amazon had submitted that the Competition Act was to foster competition in the country. An online marketplace, in fact, promotes competition and cannot be treated as anticompetitive, unless, there is clear and cogent evidence to that effect.

1. Udaya Holla and Dhyan Chinnappa, senior advocates appearing for Flipkart said that if a seller chooses to sell exclusively on Flipkart’s market place, it is his/her prerogative and Flipkart cannot be held responsible.

2. The Competition Commission of India stated that the informant has alleged that petitioners have entered into vertical agreements with ‘preferred sellers’ which has led to the foreclosure of ‘nonpreferred sellers’ from the online marketplaces.

3. The commission also argued that exclusive agreements and deep discounting raise potential competition concern, as an e-commerce platform with market power can thwart competition by entering into exclusive contracts.

4. It also said that the commission was not the only anti-trust regulator which has initiated an enquiry against Amazon. European Commission, in July 2019 had also initiated a formal investigation against Amazon on the aspect of the collection of competition sensitive data of sellers on the marketplace and its potential misuse.