Supreme Court asks CCI to decide on high court to hear challenge against e-commerce antitrust probe by 16 December

The Supreme Court on Friday gave the Competition Commission of India (CCI) until 16 December to decide which high court should handle the petitions challenging the anti-competitive probe against e-commerce giants Amazon and Flipkart.

The court issued a notice to the e-commerce sellers and adjourned the hearing to Monday after Attorney General of India R. Venkataramani said he would return with clear instructions on the appropriate high court.

The bench, led by Justices Abhay S. Oka and Pankaj Mithal, was hearing the CCI’s plea seeking the consolidation of all petitions challenging the probe against Amazon and Flipkart and transferring them to a single high court. The plea was filed against Amazon-owned e-commerce entity Cloudtail India Pvt. Ltd and others.

Delhi versus the rest

During the proceedings, disagreements arose between the CCI and e-commerce sellers on which high court should hear the case. Attorney general R. Venkataramani argued that the Delhi High Court should handle all the petitions, while the sellers, represented by senior counsels Abhishek Manu Singhvi and Mukul Rohatgi, suggested that the Karnataka High Court should continue handling the case as it has been doing so far.

The attorney general explained that they wanted the Karnataka High Court to complete the pending case, and once that was done, the remaining petitions in other high courts should be transferred to Delhi High Court.

“I thought my suggestion is fair, that the Karnataka High Court conclude the hearing, if you agree, will complete the appeal directly here, that all the matters be heard there anyway it has to be heard thereafter,” said the attorney general.

CCI argued that Amazon and Flipkart were effectively “riding on the back” of the sellers to challenge the investigation by filing petitions across the country. “I was just pointing that we are talking about millions of consumer interests. On the other hand, you have people riding on Flipkart and Amazon,” said attorney general Venkataramani.

Forum shopping charges

Additional solicitor general N. Venkataraman, who also appeared for CCI, added, “Stop selling on the giants of mobile consumers. You catalogue only four of them of your choice and then price hikes.”

In response, the sellers, represented by Abhishek Manu Singhvi and Mukul Rohatgi, argued that the Karnataka High Court should continue handling the matter.

Singhvi emphasized that, given India’s federal system, it would not be inappropriate for different high courts to deal with the cases. “We will have the benefit of the federal system,” said Singhvi.

The e-commerce sellers also accused CCI of forum shopping, with Singhvi stating, “This is complete forum shopping, my lord.”

However, the Supreme Court noted that allowing different high courts to hear the cases could set a dangerous precedent. Justice Abhay S. Oka remarked, “That will be a very dangerous precedent—that in one High Court, a single bench is to hear, in another High Court, a division bench is to hear, so we transfer it to the division bench.”

The court suggested that it was ready to send the cases to the Karnataka High Court if both parties agreed. However, with no consensus reached, the matter was deferred until Monday. “If you want all matters, go to Karnataka High Court. We will pass that order,” remarked the court.

In its plea, the CCI sought to transfer 24 writ petitions filed by Amazon, Flipkart, and their vendors from various high courts across the country to the Delhi High Court. This move was aimed at avoiding the multiplicity of proceedings.

The bench also disagreed with the CCI’s suggestion to have the matter directly heard by the division bench of the Delhi High Court. Justice Oka remarked, “Only because some litigant is to be given special treatment, bypass the rules, we can’t place it directly before the division bench.”

In response, the attorney general argued, “If it comes from a private entity, perhaps. But I am talking about a public institution concerned with public and consumer interest. I am unable to proceed with my inquiry. How many years will be taken away because they can go all around the country?”

It is also noteworthy that on 17 December, the challenge to the CCI probe is already listed for a hearing before a single bench of the Karnataka High Court, which had previously stayed the probe through an interim order.

Case history

The writ petitions stemmed from the CCI’s 2020 order under Section 26(1) of the Competition Act, which directed the director general to investigate allegations against Amazon and Flipkart. The CCI believes that the writ petitions filed by the sellers are an attempt to restrict its investigative powers.

However, the sellers contend that their status as “third parties” when the CCI started its probe into Amazon and Flipkart’s alleged anti-competitive practices was changed to “opposite parties” in July 2024, based on the director general’s investigation, without any prior notice or hearing.

CCI argued that the writ petitions were an attempt to scuttle the investigation process. If allowed, these writ petitions could interfere with the director general’s ability to conduct investigations and potentially limit the DG’s ability to investigate other parties despite finding solid evidence.

Two dozen online sellers on Amazon and Flipkart had filed writ petitions in various high courts, challenging the CCI’s antitrust probe against the e-commerce giants. The High Courts of Karnataka, Punjab and Haryana, and Madras had granted stays on CCI’s proceedings in favour of the companies.

The case against Amazon and Flipkart was triggered by a 2019 complaint by the Delhi Vyapar Mahasangh, affiliated with the Confederation of All India Traders, accusing the online marketplaces of favouring specific sellers.

On 13 January 2020, the CCI launched a formal probe into the companies for alleged anti-competitive practices, focusing on exclusive arrangements, deep discounting, and preferential product listings. The CCI directed the director general to assess whether these actions involved exclusionary tactics that distorted competition.

In February 2020, the Karnataka High Court temporarily paused the investigation after Amazon and Flipkart challenged the CCI’s authority. By June 2021, the court allowed the investigation to resume, and the companies sought relief from the Supreme Court. Their pleas were dismissed in August 2021, clearing the way for the probe to continue.

In August 2024, the CCI director general submitted a detailed report, revealing that major smartphone manufacturers like Xiaomi, Samsung, OnePlus, Realme, and Motorola were launching products exclusively on Amazon and Flipkart. The investigation found that these platforms prioritized certain sellers in search results, disadvantaging others and creating a marketplace where only preferred sellers thrived.

The report emphasized the significant market impact, as nearly 50% of smartphone sales in India occurred online in 2023, with Flipkart holding a 55% market share and Amazon 35%. The CCI also found that both companies used foreign investments to provide discounted services exclusively to select sellers, raising concerns about compliance with FDI rules and suggesting efforts to mitigate accusations of exclusive launches and deep discounts.

This led Amazon and the sellers to begin approaching High Courts in writ petitions to stay the probe. One writ plea was filed before the Karnataka High Court. Appario Retail, formerly the largest seller on Amazon India, filed a writ petition in the Karnataka High Court, seeking to quash the CCI’s investigation.

On 27 September, the Karnataka High Court halted the proceedings after considering Appario’s arguments. The court highlighted procedural lapses in the CCI’s investigation, including the director general’s reclassification of certain entities from ‘third parties’ to ‘opposite parties’ without proper approval. This reclassification exceeded the DG’s authority, violating procedural safeguards, prompting the interim stay.

This led the CCI to approach the Supreme Court, resulting in the current deliberations.