Amazon on Wednesday argued in front of a Karnataka High Court Judge that the Competition Commission of India (CCI), which is currently probing the company and its chief rival Flipkart over alleged business malpractices, did not have prima facie evidence to order the investigation into it.
Amazon and Walmart-owned Flipkart are facing a Competition Commission of India (CCI) probe over allegations of offering deep discounts, preferred listings, promotion of private labels and exclusive partnerships with phone brands.
The company said that the CCI order, dated January 13, was not based on fact but hearsay, from an informant – Delhi Vyapar Mahasangh – that had levelled similar accusations against it in the Delhi High Court and had lost those cases. It said that the investigation would have adverse impact on its reputation as it was also a listed company in the US.
Defending itself on the allegation of having exclusive tie ups with smartphone brands, the US online retail giant said that no formal agreement existed between it and the brands in question as it only functioned as a marketplace. Amazon questioned the validity of screenshots of SMSs in which brands are promoting their new phone launches being used as evidence.
Senior counsels representing Amazon went on to argue that the other piece of evidence, a mail sent by the company to its sellers which allegedly proved it was influencing prices of items sold was irrelevant. Gopal Subramanium, the lawyer representing Amazon said the mail was to sellers of fitness equipment and not smartphone vendors, which is the chief concern of the CCI order.
He added that the so-called discount that Amazon was offering was a waiving off of the marketplace fees that the company charges its sellers, to promote sales during the festive sale period.
On the allegation that Amazon passed on business to preferred sellers, it said that the two sellers Cloudtail and Appario were not controlled by it and it had only 24% stake in each of those companies. It said that the arrangement was completely within the bounds of the foreign direct investment (FDI) norms that govern e-commerce marketplaces in India.
“Not only did Amazon make frivolous claims of not engaging in business malpractices and FDI violations by stating that they do not enter into any Preferential Seller agreements and do not control any inventory, but they also tried their best to misdirect the Court by saying that it is a witch-hunt led by CAIT to malign Amazon,” said Praveen Khandelwal, Secretary General, CAIT.
The CCI order against Amazon Seller Services and Flipkart Internet, which is filed under Section 26(1) which is non-appealable. Amazon presented the court with other judgements concerning Star India and Bharti Airtel where the CCI’s probes into those companies were quashed on similar grounds that it was arguing.
Senior counsel representing Amazon also argued that when CCI received similar complaints from All India Online Vendors Association (AIOVA) against Flipkart Internet and Flipkart India in November 2018, the commission also invited Amazon to present its case. They questioned what stopped the CCI from once again inviting them to explain the allegations levelled against the company.
The scrutiny of Amazon, which has committed to invest over $5 billion in India, comes amid rising opposition by small traders against their online counterparts offering deep discounts to capture bigger market share.
The hearing on Wednesday comes after Amazon filed a writ petition in the Karnataka High Court seeking the quashing of the CCI enquiry into it. The company’s lawyers also pushed for an interim stay on the probe until the case was heard, which prompted the Judge to ask the defence to present their arguments.
However, due to the paucity of time, the judge adjourned the hearing until Thursday when the defence – CCI and Delhi Vyapar Mahasangh – will present their arguments. The senior counsel representing the CCI said that the commission would argue against the passing of an interim stay order on the investigation.
Source: The Economic Times, MINT