Amazon said India's competition watchdog has failed to acknowledge the essentials of an investor-friendly FDI regime, as the company on Wednesday launched arguments on its petition to have the CCI order of January 13 set aside or quashed. Interestingly, Amazon has also made rival Flipkart a respondent in the petition against the CCI order.

The Competition Commission of India (CCI) had in its January 13 order commissioned a probe against Amazon and Flipkart on alleged anti-competitive practices such as predatory deep discounts, exclusive launches of smart phones on the platforms and preferential treatment to sellers.

Amazon filed a writ petition in Karnataka High Court on Monday seeking to set aside or quash the CCI order and also sought an interim stay on the order until the disposal of its writ petition.

The high court did not grant an interim stay on the order as sought by Amazon, and said the hearing on the case will continue on Thursday.

Amazon has named Flipkart as 'Respondent 3' in the petition, and sources say Flipkart counsel will attend all hearings on the petition. Flipkart, which was acquired by world’s largest retailer Walmart in 2018, did not respond to the queries.

In its arguments in the court, Amazon said that CCI had not reached out to the company before bringing out the order. The company said the CCI should have given the company the opportunity to respond to the allegations and should have sought understanding on the nature of agreements between the sellers and the platform.

In fact, Amazon said that it had participated in the study on e-commerce that CCI had conducted over the past several months and which was brought out on January 8, just a week before the order. The company argued that several of the recommendation in that study were based on Amazon's submissions on self-regulation.

The company lawyers also commented on how India has been putting up foreign direct investment (FDI) on banners globally, even as the CCI order goes against an investor-friendly FDI regime.

"You cannot put FDI on banners globally, and then say you will investigate FDI," the counsel said in court.

"Even though Amazon may not be a citizen entitled to guarantees under Article 19 of the Constitution, it is entitled to protection under Articles 14 and 21 and is assured against unreasonable, unwarranted, arbitrary, ultra vires and mala fide action of any authoirty, whether it is government or statutory," the company said in its petition.

During the arguments, Amazon also said that it did not have any preferred sellers, and that Cloudtail, an enitity in which an Amazon subsidiary has a 24 percent stake, is not controlled by the marketplace.

On allegations of discounting, the company said that sellers look to push more products during peak seasons such as Diwali and that Amazon cuts the registration fee they have to pay by 5-10 percent, which does not amount to deep discounting.

Amazon also said that its agreements with third-party sellers does not stipulate exclusivity obligations. In fact, Amazon said that the exclusive launches of smartphones on online channels boost offline sales. The company also said it had 75,000 sellers on its platform, and that algorithms decide on their visibility on their volumes and capacity.

In its petition, Amazon cited past cases of Vodafone versus CCI, the AIOVA case with CCI against Flipkart of 2018, the case filed by the Confederation Of All India Traders (CAIT) in Delhi high court, and several others.

The CCI had dismissed a petition filed against ecommerce players such as Flipkart and Amazon by the All India Online Vendors Association in 2018, which was filed under Section 4 of the Competition Act on abuse of dominant market position

The hearing will continue on Thursday, with the Delhi Vyapar Mahasangh, the complainant in the case against the ecommerce players, making arguments, along with representatives of CCI.

The Delhi Vyapar Mahasangh has filed a complaint seeking investigation under Section 26 (1) of the Competition Act, which allows the CCI to order an investigation (Director General's (DG's) investigation) in case of 'prima facie' violations of the Act. CCI has said it will complete its investigation in 60 days.

First Published:Feb 12, 2020 9:08 PM IST