Karnataka HC judgement seems to have missed an opportunity: S&R Associates

In addition, the services provided by e-commerce platforms have not been limited to metros and Tier-I cities, but have been increasingly availed of by people in Tier II and III towns in India.

New Delhi: The Karnataka High Court judgement seems to have missed an opportunity to settle and explicate the law in cases involving parallel investigations or similar issues, and its handling of these issues may have left the door open to protracted litigation, S&R Associates, said in a note.

The Karnataka High Court has, on June 11, 20211, dismissed the writ petitions filed by Amazon Seller Services Private Limited and Flipkart Internet Private Limited challenging the Competition Commission of India’s (CCI) order issued under Section 26(1) of the Competition Act, 2002 (the “Competition Act”) on January 13, 2020, directing the Director General to investigate certain alleged anti-competitive practices.

---

“While the Karnataka High Court’s judgment appears to follow well-established legal principles laid down by the Supreme Court of India, a closer examination reveals that the judgment gives only a cursory consideration to some of the key arguments raised by Amazon and Flipkart (together, the “E-Commerce Platforms”).

It said the CCI Order seems to represent a shift in the approach from that adopted in the CCI’s AIOVA Order. This is also notable since the pandemic may have resulted in the realization of some of the untapped ‘efficiencies and consumer benefits’ alluded to by the CCI above, including by way of e-commerce platforms supporting the provision of essential (and other) supplies, reducing disruptions, and enabling safe and socially distanced retail.

In addition, the services provided by e-commerce platforms have not been limited to metros and Tier-I cities, but have been increasingly availed of by people in Tier II and III towns in India.

“Accordingly, it is imperative that a clear and coherent policy be devised and implemented in respect of the e-commerce sector in India, since frequent changes and narrow interpretation of laws, and over regulation of the sector will stymie innovation, detract from consumer welfare, erode investor confidence and have a chilling effect on competition. A more circumspect approach will not only instill confidence in the industry but also attract investments and promote economic growth”, it said.

Accordingly, the judicially prudent approach may have been to await the final decision of the Supreme Court in the AIOVA’s matter, as opposed to initiating an additional investigation against Flipkart on similar allegations of exclusive dealings and predatory pricing/deep-discounting. The fact that the Supreme Court’s stay does not seem to have figured in the court’s analysis at all, may leave this Judgment vulnerable to further challenge, the law firm said.