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CCI doesn’t have prima facie proof, Amazon tells HC

The company said the CCI’s January 13 order was not based on fact but hearsay, from an informant — the Delhi Vyapar Mahasangh which is an affiliate of the Confederation of All India Traders (CAIT).

ET Bureau|
Last Updated: Feb 13, 2020, 08.28 AM IST
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Senior counsels representing Amazon termed as irrelevant another piece of evidence — a mail sent by the company to its sellers which allegedly showed it was influencing prices of items sold on the platform.
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BENGALURU: 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.

The company said the CCI’s January 13 order was not based on fact but hearsay, from an informant — the Delhi Vyapar Mahasangh which is an affiliate of the Confederation of All India Traders (CAIT) — that had levelled similar accusations against it in the Delhi High Court and had lost those cases. Amazon said the investigation would have adverse impact on its reputation as it was also a listed company in the US.

Flipkart, which was also named as a respondent in the case filed by Amazon in Bengaluru, did not make its stance on the issue known to the court.

“Our counsel was present in audience and did not actively participate,” a company spokesperson told ET. Defending itself on the allegation of having exclusive tie-ups with smartphone brands, the USbased online retail giant said 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 SMSes — in which brands were seen promoting their new phone launches on the platforms — being used as evidence.

Senior counsels representing Amazon termed as irrelevant another piece of evidence — a mail sent by the company to its sellers which allegedly showed it was influencing prices of items sold on the platform.

Gopal Subramanium, the lawyer representing Amazon said the mail was to sellers of fitness equipment and not smartphone vendors, which was the chief concern of the CCI order. He added that the so-called discount that Amazon was offering was waiving 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 the two sellers named in the complaint, Cloudtail and Appario, were not controlled by it and it had only a 24% stake in each of those. It said the arrangement was completely within the bounds of the foreign direct investment (FDI) rules for ecommerce marketplaces in India.

The traders’ association dismissed the claims that the company made in the court. “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 witchhunt led by the CAIT to malign Amazon,” CAIT secretary-general Praveen Khandelwal said in a statement.

The CCI order against Amazon Seller Services and Flipkart Internet is given under a provision that is non-appealable.

Amazon presented the court with other judgements concerning Star India and Bharti Airtel where the CCI’s probes were quashed on similar grounds that it was arguing.

The senior counsels representing Amazon also argued that when the CCI received similar complaints from the All India Online Vendors Association against Flipkart Internet and Flipkart India in November 2018, the commission had invited Amazon also to present its case. They asked what stopped the CCI from once again inviting them to explain the allegations this time.

The hearing on Wednesday comes after Amazon filed a writ petition in the Karnataka High Court seeking the quashing of the CCI inquiry. 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 — the CCI and Delhi Vyapar Mahasangh — will make their arguments. The senior counsel representing the CCI said the commission would argue against passing of any interim stay order on the probe.

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