On February 14, 2020, a single bench of the High Court of Karnataka (‘KHC’) ordered a stay of the  prima facie order of CCI dated January 13, 2020[1], (‘CCI Order’) directing the DG to conduct a detailed investigation against Flipkart Internet Services Private Limited (‘Flipkart’) and Amazon Seller Services Private Limited (‘Amazon’), and their affiliated entities (collectively, the ‘Opposite Parties’) [2].

The Delhi Vyapar Mahasangh (‘DVM’) had alleged that the Opposite Parties had entered into various exclusive vertical anti-competitive agreements with certain ‘preferred’ sellers on their marketplaces for the sale of various products, across sectors, including the smartphone market, where the Opposite Parties were the platform for the exclusive launch of several smartphone models. CCI ordered an investigation[3] to ascertain whether the alleged exclusive arrangements, deep-discounting and preferential listing by the Opposite Parties were used as an exclusionary tactic to foreclose competition in violation of the provisions of the Act.

Amazon approached the KHC in a writ challenging CCI Order and after hearing Amazon’s submissions, KHC ordered a stay on CCI Order on the following grounds: (i) CCI had invited Amazon for an oral hearing to understand the nuances of e-commerce platforms and businesses in India in an earlier complaint filed by All India Online Vendors Association (‘AIOVA’) against Flipkart. After hearing Amazon and Flipkart, CCI closed the case. However, in the present complaint with similar allegations, CCI did not call Amazon and Flipkart for an oral hearing to understand the allegations, before passing an investigation order; (ii) Amazon is currently being investigated for violation of the Foreign Direct Investment (‘FDI’) norms, which allegedly enable it to provide deep discounts. Therefore, CCI could not have initiated an investigation, in light of the Supreme Court’s (‘SC’) judgment in CCI v. Bharti Airtel Limited and ors.[4], that held that the jurisdiction of CCI is barred till the time a specialised regulator conducts an investigation and arrives at a finding of contravention of that law; (iii) Amazon could demonstrate that the Confederation of All India Traders had filed multiple cases before the DHC, Rajasthan High Court against Flipkart and Amazon on similar allegations and had paid the fee for filing the complaint before CCI which shows malice behind filing of the complaint; and (iv) CCI failed to define the ‘agreement’ in question before directing an investigation against an anti-competitive agreement as laid down by the Bombay High Court in its order in Star India Private Limited v. CCI and ors.[5]. CCI had not identified or perused the exclusive agreement between Amazon and ‘preferred sellers’ against which the investigation was directed. The matter is currently pending final adjudication.

[1] Case No. 40 of 2019, available at https://www.cci.gov.in/sites/default/files/40-of-2019.pdf [2] Amazon Seller Services Private Limited v. CCI, W.P. 3363 of 2020, Karnataka High Court. [3] Summary of the CCI Order available at https://www.azbpartners.com/bank/cci-orders-detailed-investigation-on-flipkart-and-amazon/ [4] CCI v. Bharti Airtel Limited and ors., Civil Appeal No.11843 of 2018. [5] Star India Private Limited v. CCI , W. P. No. 9175 of 2018.