Supreme Court stays NCLAT order for CCI probe against Flipkart

On March 4, the NCLAT has set aside the earlier order passed by the CCI absolving Flipkart of unfair practices using its dominant position and directed it to ask its probe arm Director General (DG) to investigate into the allegations.
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The Supreme Court on Wednesday stayed the March 4 order of National Company Law Appellate Tribunal (NCLAT) asking fair trade regulator CCI to again initiate the probe against ecommerce major Flipkart for an alleged use of its dominant position.

A bench of Chief Justice S A Bobde, and Justices A S Bopanna and V Ramasubramanian, which initially was of the view to send back the matter to NCLAT after setting aside March 4 order and decision on all aspects including the issue of dominant position being enjoyed by Flipkart, later stayed appellate tribunal's decision.

The top court issued notice to All India Online Vendors Association (sellers association) and Competition Commission of India (CCI).

Senior advocate Harish Salve, appearing for Flipkart, said that CCI doesn't look at the findings of the government and relied on the tax department findings and misread the findings of the tax tribunal.

He said that the other ecommerce major Amazon is against his client company and if he is not a dominant player then the allegations of predatory pricing does not apply on Flipkart.

Salve submitted that the predatory pricing is an issue to be considered against the dominant player as a case of abuse of power but his client has not been held as a dominant player.

The bench said that the CCI has rendered a categorical finding that Flipkart does not have the dominant position and the NCLAT has not reversed the findings on the dominant position.

It told the counsel for vendors association that if they are agreed that the NCLAT should have considered the issues of dominant position then it can remand back the matter.

To which counsel appearing for All India Online Vendors Association (sellers association) said that they would like to argue the matter.

The bench then issued notice and stayed the March 4 order of NCLAT and listed the matter for further hearing.

On March 4, the NCLAT has set aside the earlier order passed by the CCI absolving Flipkart of unfair practices using its dominant position and directed it to ask its probe arm Director General (DG) to investigate into the allegations.

The NCLAT said that the All India Online Vendors Association (AIOVA) had successfully made its case here.

In November 2018, the AIOVA had approached the CCI alleging abuse of market dominance by ecommerce major.

The AIOVA had alleged abuse of market dominance against Flipkart India Pvt Ltd, which is into wholesale trading/distribution of books, mobiles, computers and related accessories, and ecommerce marketplace Flipkart Internet Pvt Ltd.

It had alleged that small vendors have become allies of the big vendors and suppliers to leading sellers such as Cloudtail, WS Retail, etc on the Flipkart and Amazon platforms, rather than selling directly to consumers through the online e-commerce marketplace sites.

However, passing an order on November 6, 2018, the CCI had held that the business practices of Flipkart and Amazon are not in violation of competition norms and rejected allegations of abuse of market dominance made by the AIOVA.

The CCI had ruled that looking at the present market construct and structure of online marketplace platforms in India, "it does not appear that any one player in the market is commanding any dominant position at this stage of evolution of market".

The AIOVA, as mentioned in the CCI order, is a group of over 2,000 sellers selling on ecommerce marketplaces such as Flipkart, Amazon, Snapdeal etc.

Edited by Kanishk Singh

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