Case Note & Summary
The dispute involves writ petitions filed by Amazon Seller Services Private Limited and Flipkart Internet Private Limited, challenging an order dated January 13, 2020 passed by the Competition Commission of India in Case No.40/2019. The Commission had directed an investigation under Section 26(1) of the Competition Act, 2002 based on information filed by Delhi Vyapar Mahasangh, a society of micro, small and medium enterprises, alleging contravention of Sections 3(1) read with 3(4) and Section 4(1) and 4(2) of the Act. Amazon and Flipkart operate online marketplaces where third-party sellers list and sell products. Amazon also provides support services such as warehousing, packing, shipment, delivery, and payment processing. The petitioners challenged the Commission's order on multiple grounds: it was ultra vires the object of the Competition Act, suffered from non-application of mind, lacked a prima facie opinion on appreciable adverse effect on competition, was based on unclean hands of the informant who acted on behalf of the Confederation of All India Traders after failing in other forums, deviated from past practice of granting hearing, and was an abuse of process. They argued that three jurisdictional facts were absent: an agreement, between enterprises at different levels of the supply chain, causing appreciable adverse effect on competition. They also contended that the Commission could not supplement its reasoning through the statement of objections during proceedings. The informant's connections with the Confederation of All India Traders and pending Enforcement Directorate investigation were raised to question the Commission's jurisdiction. The court heard extensive arguments from senior advocates for both petitioners, who emphasized the need for a reasoned order and prima facie satisfaction before directing investigation. The writ petitions were heard through video conferencing and reserved for orders on April 23, 2021. The court's final decision on the merits of the challenge is not included in the provided text.
Headnote
A) Competition Law - Investigation by CCI - Need for prima facie opinion - Section 26(1) Competition Act, 2002 - Petitioners challenged the order directing investigation on the ground that the Commission must form a prima facie opinion about the existence of an anti-competitive agreement and its appreciable adverse effect on competition before ordering investigation. (Paras 5, 6, 7) B) Competition Law - Jurisdictional Facts - Agreement between enterprises at different levels - Section 3(4) Competition Act, 2002 - It was argued that three jurisdictional facts are required: an agreement, between enterprises at different levels of production/supply chain, causing or likely to cause appreciable adverse effect on competition, and these were not satisfied by the Commission. (Paras 6, 7) C) Competition Law - Procedure - Opportunity of hearing before forming prima facie view - Section 26(1) Competition Act, 2002 - Petitioners contended that the Commission had on earlier occasions provided hearing before forming a prima facie view, and deviation from this practice renders the order invalid. (Para 5(f)) D) Competition Law - Abuse of Process - Unclean hands of informant - Competition Act, 2002 - Petitioners alleged that the informant approached the Commission with unclean hands as the Confederation of All India Traders had failed to obtain favourable orders in other proceedings and used Delhi Vyapar Mahasangh to pursue its cause. (Paras 5(c), 6) E) Competition Law - Jurisdiction - Pending investigation by Enforcement Directorate - Competition Act, 2002 - Petitioners contended that the jurisdiction of the CCI is barred due to a pending investigation by the Enforcement Directorate into similar issues. (Para 5(i)) F) Competition Law - Principles - Ultra vires object and purpose of the Act - Competition Act, 2002 - The impugned order was challenged as ultra vires the object and purpose of the Competition Act as online marketplaces promote competition and cannot be treated as anti-competitive without clear evidence. (Paras 5(a), 6) G) Competition Law - Reasoned Order - Requirement of analysis on appreciable adverse effect on competition - Competition Act, 2002 - Petitioners argued that the order is not a reasoned order as there is no analysis with regard to appreciable adverse effect on competition, which is mandatory before directing investigation. (Paras 5(g), 6)
Issue of Consideration
Whether the Competition Commission of India's order directing investigation under Section 26(1) of the Competition Act, 2002 without forming a prima facie opinion regarding appreciable adverse effect on competition is legally valid?
Law Points
- prima facie opinion required before investigation
- jurisdictional facts essential
- appreciable adverse effect on competition must be considered
- order under Section 26(1) must be reasoned
- unclean hands of informant
- ultra vires
- non-application of mind
