CCI urges Karnataka High Court to vacate stay protecting Amazon, Flipkart ‘preferred vendors’

The Competition Commission of India (CCI) on Wednesday urged the Karnataka High Court to vacate the interim stay it had granted in favour of a batch of alleged 'preferred vendors' of e-commerce platforms Amazon and Flipkart [Rockett Commerce LLP v. CCI].

Additional Solicitor General N Venkataraman, who appeared for the CCI, told the Court that the Commission had followed due process and principles of natural justice while arraying around 13 vendors as ‘opposite parties’ in its ongoing investigation into allegations that Amazon and Flipkart favoured some vendors over others.

Venkataraman made his submissions before Justice Hemant Chandangoudar, who was hearing a batch of petitions filed by six such alleged preferred vendors.

On September 27 this year, Justice Chandangoudar had granted an interim stay on an order issued by the CCI on August 28 this year, arraying the vendors as opposite parties in the case and asking them to share certain relevant information.

On Thursday, Senior Advocate KG Raghavan, who appeared for one of the petitioner vendors, told the Court that as per the Competition Act, 2002, the CCI has the authority to order its Director General (DG) to conduct an investigation if it is of the opinion that a prima facie case exists.

In the present matter, in January 2022, the CCI directed an investigation only against Amazon and Flipkart, arraying them as opposite parties number 1 and number 2, respectively. The alleged preferred vendors were merely treated as third parties and asked to cooperate with the probe, Raghavan said.

In August this year, the DG issued notices to the petitioners, requiring them to furnish information as third parties. Subsequently, on August 28, the DG informed the vendors that they were being arrayed as opposite parties. This was in violation of Regulation 24 of the Competition Commission of India (General) Regulations, which requires the DG to seek written permission from the CCI to alter the status of a party from a third party to an opposite party in the course of an investigation, Raghavan argued.

Venkataraman, on the other hand, argued that the Act did not differentiate between a third party and an opposite party and hence, no regulations had been breached.

“They (vendors) co-operated with the probe for four years. We issued them notices initially as we were conducting the probe with a neutral mind. Subsequently, it was found that they had been preferred by the platforms and they had enjoyed benefits such as always showing up first in searches etc. So, we have arrayed them as opposing parties. This petition is their attempt to scuttle the entire investigation because the two platforms already went all the way up to the Supreme Court and lost there. Therefore, I request the Court to vacate the interim stay order,” Venkataraman said.

The Court will hear the matter further on November 27. The interim relief granted to the petitioners will continue until then, it said.