Despite Flipkart and Amazon’s pleas, Karnataka HC gives the green signal to initiate anti-trust investigations over their illegal anti-competitive practices

Amazon and Flipkart (owned by Walmart), the two American e-commerce giants which are abusing India’s law every day to squeeze the Indian retailers, have been dealt a heavy blow by the Karnataka high court. Competition Commission of India (CCI) is probing Amazon and Flipkart for anti-competitive practices and predatory pricing on the basis of a plea filed by Delhi Vyapar Mahasangh (DVM), a group representing small and medium business owners in the national capital,

The e-commerce giants filed a writ petition in Karnataka high court, requesting to stop the investigation by CCI and said that they have done nothing wrong. However, the Karnataka high court bench was not convinced by their arguments and dismissed the petition.

“It fully vindicates the stand of CAIT that Amazon and Flipkart business model is entirely based on violating the FDI policy, rules and other laws and therefore without wasting any more time, the CCI should immediately begin its probe,” said BC Bhartia, National President and Praveen Khandelwal, Secretary-General of the Confederation of All India Traders (CAIT).

CAIT also said that foreign companies particularly in the e-commerce sector have been taking India as a banana republic where the laws, policies and rules have no sanctity and they have been provided with impunity to manipulate them according to their wish. “Unfortunately they have been successfully violating the law and the policies bringing many disadvantages to the small traders of the country. Therefore, the dictum “actions speak louder than the words” needs to be put into practical operations by the Union Government.”

Previously, in an article published on February 17, Reuters, brought out the internal email communications of Amazon on using illegal policies to establish itself as pre-eminent e-commerce players in the country.

The investigation by Reuters on Amazon has brought out the facts which were known for years from its own books. As per the investigation, the internal documents of Amazon India reveal that it helps the companies in which it owns the stocks to sell products in India – which is illegal. This was something that Union Minister of Commerce and Industry, Piyush Goyal had widely talked about last year, and the truth is finally out.

“Amazon favoured big sellers on its India platform – and used them to manoeuvre around rules meant to protect the country’s small retailers from getting crushed by e-commerce giants, internal documents show. As one presentation urged: Test the Boundaries of what is allowed by law,” reads the story by Reuters.

In March 2016, the Modi government allowed 100 per cent FDI in online stores that follow the marketplace model, which essentially means that no FDI is permitted in firms following the inventory model. The marketplace model means providing an information technology platform by an e-commerce entity on a digital and electronic network to act as a facilitator (for a fee) between buyer and seller, but unlike the companies that follow the inventory model, these companies cannot sell their own products.

However, Amazon created companies like Cloudtail to sell products at deep discounts. As of today, “some 33 Amazon sellers accounted for about a third of the value of all goods sold on the company’s website” because the company has some direct or indirect interest in these companies.

Amazon has been flouting the Indian norms of e-commerce for more than five years and the Government of India would teach it a lesson very soon. So far, it has used legal loopholes to stay safe but now even the courts can see its blatant abuse of Indian law.