An Indian court dismissed the appeals by US-based eCommerce giant Amazon and American multinational retail corporation Walmart’s Flipkart that sought to hold back an antitrust investigation into their business practices.
Last year, the Competition Commission of India (CCI) ordered an inquiry after the brick-and-mortar retailers raised allegations against the US firms that they promoted select sellers on their eCommerce platforms and used business practices that restrained competition.
For more than a year, the investigation was on hold after companies challenged it, denying wrongdoing and arguing that the CCI lacks enough proof, but an Indian court allowed it to continue the investigation in June. The High Court in southern Karnataka state rejected the US firms’ appeals.
“By no stretch of imagination can inquiry be quashed at this stage. The appeals are nothing but an attempt to ensure that action initiated by the CCI, does not attain finality. The appeals are devoid of merit, and deserve to be dismissed,” a two-judge bench said while reading the decision in court.
According to people familiar with the matter, the two firms are likely to appeal the decision at India’s Supreme Court. Amazon did not immediately respond to a request for comment. While, Flipkart in its statement said that it would review the court’s order, adding that it remains in compliance with Indian laws.
Mr. Abir Roy of Sarvada Legal, which filed the antitrust case against Amazon and Flipkart on behalf of a trader group, said the court’s decision “further reinforces that the CCI investigation should continue promptly.”
The CCI investigation is the latest setback for Amazon and Flipkart, which are grappling with prospects of tougher eCommerce regulations and accusations from brick-and-mortar retailers that the companies circumvent Indian law by creating complex business structures.
The companies face several allegations in the case, including exclusive launches of mobile phones, promotion of select sellers on their websites, and deep discounting practices that drive out competition.
Trade minister of India Mr. Piyush Goyal last month lashed out at US eCommerce giants for filing legal challenges and failing to comply with the CCI’s investigation, saying “if they have nothing to hide, why don’t they respond to the CCI?”
The American eCommerce giant Amazon is currently facing another CCI challenge, with the watchdog accusing the company of concealing facts and making false submissions when it sought approval for a 2019 deal with an Indian company.