Amazon India has moved the Karnataka HC seeking a stay on a probe by the Competition Commission of India (CCI). The e-tailer has slammed the probe, terming it “perverse, arbitrary & untenable in law” as it prepares for a legal battle.
While Amazon has requested the court to quash or set aside this probe by the Competition Commission of India (CCI), the e-commerce major is seeking an interim stay, without which, the company said, it would see “irreparable loss” & the same will hurt its brand goodwill.
On Jan 13, Competition Commission of India (CCI) had ordered an investigation into the operations of US-owned e-tailers like Amazon India & Flipkart (in which Walmart owns a 77% stake) for various trade practices, including deep discounts & favourable terms to select sellers. This was done following a complaint by the Delhi Vyapar Mahasangh, a group representing small- & medium-sized businesses, against the two e-tailers who dominate the online retail market with an over 70% share.
Legal experts said there was some strong language used by Amazon, which has invested $7 billion in India, against the competition regulator. “There is a strong prima facie case for a stay in favour of the petitioner (Amazon) as the impunged order has been passed without application in mind, the balance of inconvenience for the stay lies in favour of the petitioner…” Amazon said in its petition filed on Monday.
The Amazon petition added that, while a stay order won’t impact Competition Commission of India (CCI), it would affect Amazon if not granted. Interestingly, CCI’s order to probe Amazon came days before the US giant’s CEO Jeff Bezos landed in India last month, where he announced a fresh investment of $1 billion. Right after Bezos’s announcement, commerce & industry minister Piyush Goyal kicked up a row saying Amazon wasn’t “doing any favour” to India by investing as it was to cover up losses, even questioning how can a marketplace lose so much money.
An Amazon India spokesperson said, “The matter is sub judice & hence we can’t offer any comments.” It isn’t clear if Flipkart is also likely to follow the same route. A Flipkart spokesperson didn’t immediately respond to News Agency.
A lawyer, who didn’t want to be named, pointed out a Bombay HC order in 2017 where the court had quashed a cartelisation probe against telecom companies like Airtel, Vodafone & Idea. The Supreme Court also later upheld the same order against the probe. “There is precedence in that sense. But it remains to be seen how this application moves,” this lawyer said. The matter is expected to be heard during this week.
The complaint against Amazon & Flipkart has been in the making for a while as small traders have been complaining to the govt over various practices by the e-tailer throughout 2019, which eventually led Competition Commission of India (CCI) to announce the probe. Prior to that, Competition Commission of India (CCI) had conducted a detailed study on the e-commerce market. Also, effective February last year, the govt tightened the laws for FDI in e-commerce, which forced Amazon & Flipkart to make operational changes that affected their relations with certain sellers.
Both Amazon & Flipkart officially maintain they are compliant with local laws but executives in these companies have been wary of frequent policy changes by the government, saying it hurts the growth of e-commerce here. In the Budget on Feb 1, the govt announced a new withholding tax for e-commerce transactions, which would cause a liquidity squeeze for small & medium sellers. The e-tailers are seeking clarity & Amazon had said it was hoping for a simple & uniform tax regime in India.
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