The Karnataka High Court on Friday dismissed Amazon and Flipkart’s writ petition that challenged the probe ordered by Competition Commission of India (CCI) against their business practices, under the competition law.

The order was passed by Justice PS Dinesh Kumar who heard the writ petitions moved by both Amazon and Flipkart.

“It is expected that an order directing investigation be supported by ‘some reasoning’, which the Commission has fulfilled. Therefore, it would be unwise to prejudge the issues raised by the petitioners in these writ petitions at this stage and scuttle the investigation. Therefore, the impugned order does not call for any interference […] Resultantly, these writ petitions must fail.

Accordingly, Rule is discharged and writ petitions stand dismissed,” said the court order passed on June 11. Mint has seen a copy of the recent court order.

Flipkart and Amazon India are expected to challenge the order now, according to two individuals who spoke on condition of anonymity.

“There are gaps in the judgement which gives credence to appeal. For allegations that pertain to the market for ‘smartphones sold on online marketplaces in India’ – the Commission has ignored the fact that online marketplaces do not exercise control over the inventory or distribution of these smartphones, and therefore, cannot be considered as part of the supply chain for the sale of these smartphones,” said one of the individuals quoted above.

In 2019, Delhi Vyapar Mahasangh (DVM), a group of owners of several micro, small and medium enterprises, submitted a plea with the Competition Commission alleging Flipkart and Amazon for abusing their market dominance and giving preferential treatment to select vendors, in which they control indirect stakes.

DVM also alleged that Amazon India and Flipkart were giving preferential listing and deep discounting on products sold by these select vendors, which hurt small businesses in the country.

Based on the first information received from DVM, the CCI directed the Director General to launch a probe in January 2020, for alleged violation of Section 3 of the Competition Act.

Thereafter, Amazon India and Flipkart moved to the Karnataka High Court in February 2020, which granted both companies an interim stay on the CCI probe. By October, last year, CCI challenged the interim order at the Supreme Court, which was dismissed and referred back to the Karnataka High Court.

“We will review the judgement carefully and decide on the next steps,” said Amazon India in a statement replying to Mint’s queries.

Madhavi Diwan, additional solicitor general for the Commission, S. Gautamaditya, advocate for Delhi Vyapar Mahasangh and Abhir Roy, advocate for Confederation Of All India Traders (CAIT) argued against the writ petition made by the two e-commerce companies.

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