Wednesday 12 February 2020

Amazon moves High Court to get CCI probe quashed

Amazon moves High Court to get CCI probe quashedBENGALURU: Amazon on Monday filed a petition in the Karnataka High Court to “quash” the investigation ordered by India’s competition watchdog into alleged malpractices by the online marketplace.

The American company also sought an interim stay on the probe ordered by Competition Commission of India (CCI) last month while its petition is heard by the court. In its submission, Amazon claimed that CCI’s order would cause irreparable damage and loss to its goodwill.

In response to ET’s emailed query on the matter, a representative for Amazon declined to comment citing the matter to be sub judice. CCI chairman Ashok Kumar Gupta too declined to comment on the issue.

Legal experts termed Amazon’s move challenging the premise of the CCI order as “an aggressive defence.”

Practices under lens
“However, given the recent trends, questions over the practices of online platforms are only going to increase in the coming days,” said Arjun Sinha of law firm AP & Partners.

The CCI on January 13 passed an order to investigate Amazon Seller Services as well as rival Flipkart Internet, units of the country’s two largest ecommerce marketplaces, on allegations of business malpractices including discounting practices, exclusive brand launches and preferential treatment of sellers.

Flipkart declined comment on the latest developments.

The CCI order was in response to a complaint from Delhi Vyapar Mahasangh, a group representing small brick-and-mortar businesses. Amazon in its petition asked the high court to direct the “quashing and setting aside the Impugned Order dated January 13, 2020… passed by the Competition Commission of India.”

An Amazon spokesperson at the time had told ET that the company was confident in its compliance and would cooperate fully with CCI’s probe.

In the first week of January, CCI released the findings of a market study that it had conducted where it cited a lack of transparency in the functioning of marketplaces. This was leading to deep mistrust between the marketplace and vendors on these platforms, CCI said. It then suggested self-regulation by ecommerce marketplaces.

Amazon moves High Court to get CCI probe quashed
The probe against Flipkart and Amazon comes at a time when there’s increased scrutiny by the government on the business practices of ecommerce companies that are being accused by groupings of online vendors and offline retailers of engaging in predatory pricing, favouring certain vendors and skewing the market with private labels.

The government has repeatedly asked ecommerce players to abide by the rules of the land.

In December 2018, the government had issued a clarification on foreign direct investment rules for e-commerce, which barred marketplaces from listing group companies as sellers. The move led to Amazon divesting its stake in the parent companies of Cloudtail and Appario, two of the largest sellers on its platform, when the rules came into effect on February 1, 2019.

At the time, Amazon had told investors in one of its quarterly results briefings that disruptions in supply caused by change in regulations in India had not affected its sales.

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