CCI to initiate fresh probe into Flipkart as traders body wins appeal

CCI to initiate fresh probe into Flipkart as traders body wins appeal
Photo Credit: VCCircle
4 Mar, 2020

The Competition Commission of India (CCI) will direct a fresh investigation against the business practices of Walmart-owned ecommerce marketplace Flipkart. This follows the National Company Law Appellate Tribunal’s (NCLAT) acceptance of an appeal filed by All India Online Vendors Association (AIOVA) against the clean chit given to the company.

“Today’s order will lead to a fresh investigation on Flipkart by CCI, based on the evidence submitted by the AIOVA. As of now, the investigation initiated against Flipkart and Amazon India have been stalled due to the stay order by the Karnataka High Court,” Chanakya Basa, who is representing AIOVA in the case, said.

In February, an interim stay was granted by the Karnataka High Court on a CCI investigation against Flipkart and Amazon India and today’s order could have a direct bearing on the same.

The CCI had ordered the initial probe based on a complaint by traders body Delhi Vyapar Mahasangh on January 13. Another traders body, the Confederation of All India Traders (CAIT), was also party to the petition. Amazon, followed by Flipkart, then filed a petition requesting a stay on the investigation.

The AIOVA had filed a complaint with the CCI in May 2018 alleging that Flipkart “... sold goods to a few preferred sellers, incurring losses at deep discounts, resulting in reduced prices on the ecommerce marketplace”. The complaint also alleged that preferred sellers on Flipkart, such as RetailNet, India Flash Mart, Omnitech Retail and Trunet Commerce paid lesser platform fee than to other sellers. The AIOVA said that these practices led to discriminatory conditions by Flipkart under Section 4(2) of the Competition Act, 2002.

The CCI had rejected the complaint in November 2018, stating that no online marketplace in India enjoys a clear dominant position. This was followed by an appeal by the AIOVA with the NCLAT in May last year.

“This order is certainly going to impact the stay granted by the Karnataka High Court against investigation into Amazon and Flipkart. Our lawyers will examine the implications of the order and then decide our future course of legal action,” Praveen Khandelwal, secretary general of CAIT, said in a statement.

Amazon was not a respondent to the complaint filed by AIOVA.