Supreme Court Asks NCLAT To Take Fresh Decision On Whether Probe Needed Against Flipkart Under Competition Act

The Supreme Court on Tuesday set aside the order passed by the National Company Appellate Tribunal (NCLAT) in 2020 directing a probe by the Director General on whether there was any violation of the Competition Act 2000 by Flipkart.The Court remanded the matter to the NCLAT for fresh consideration, after considering Flipkart's argument that the NCLAT passed the order relying on the observations made by an Assessment Officer in income tax proceedings which were set aside by the Income Tax Appellate Tribunal (ITAT).The Court clarified that it has left open all issues for fresh consideration by the NCLAT."We request the NCLAT to decide the appeal afresh, keeping in mind the principles stated by this Court in a catena of decisions, including in Coal India Ltd. The parties will be at liberty to raise their respective contentions for the purpose of determining whether a prima facie case is made out, and if so, whether further remand of the case to the CCI is warranted," observed a bench comprising Chief Justice of India Surya Kant, Justice Joymalya Bagchi and Justice Vipul Pancholi.Senior Advocate Dr Abhishek Manu Singhvi, for Flipkart Internet Pvt Ltd, submitted that there is no finding that it was the dominant player in the relevant market and that there was any abuse of dominance by it. He submitted that the NCLAT's order was based on some observations made by an Assessing Officer in income tax proceedings. The Assessing Officer's order was set aside by the Income Tax Appellate Tribunal (ITAT), Singhvi argued. Singhvi submitted that the Competition Commission of India had found that Flipkart was not a dominant player. He claimed that Amazon was the dominant player in the online marketplace. He relied on the tests laid down by the Supreme Court in the Coal India case and submitted that none of them were fulfilled as against Flipkart.At this juncture, the CJI proposed remanding the matter to the NCLAT, to consider factors other than the Assessing Officer's findings. The counsel for the All India Online Vendors' Association, the informant before the CCI, submitted that the ITAT reversed the Assessment Order on points of law, and the observations regarding the business model were not interfered with.Senior Advocate Rajshekhar Rao, for Flipkart India, submitted that the assessment order was passed in the context of Flipkart India, which is a B2B wholesale entity, which has a minuscule market share. The relavant market place is the online marketplace which is handled by Flipkart Internet Private Ltd. Rao submitted that the observations with respect to Flipkart India in assessment proceedings were applied against Flipkart Internet Pvt Ltd.BackgroundOn March 4, 2020, the NCLAT had set aside the earlier order passed by the CCI closing the complaint filed by AIOVA seeking a probe by the Director General of CCI against Flipkart. The NCLAT held that prima facie Flipkart had contravened Section 4 of the Competition Act, 2002 which related to the abuse of dominant position and predatory pricing.The NCLAT, therefore, set aside the CCI order closing the complaint in terms of Section 26(2) of the Competition Act after holding that no case of contravention of Section 4 was made out.NCLAT Order A bench headed by Justice S J Mukhopadhyay referred to the ITAT order in Flipkart India Private Limited vs. Assistant Commissioner of Income-Tax" in ITANo.202/Bang/2018,where Assessing officer had explained that Flipkart India Private Limited (FIPL) would acquire goods from various persons and immediately sell them at a discount to retail sellers like WS Retail Services Private Limited and others.In November 2018, the AIOVA, a group of over 2,000 sellers selling on e-commerce marketplaces, had approached the CCI alleging abuse of market dominance by an e-commerce 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 e-commerce 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.FLIPKART INDIA PRIVATE LIMITED Vs COMPETITION COMMISSION OF INDIA | C.A. No. 2770/2020

Supreme Court Asks NCLAT To Take Fresh Decision On Whether Probe Needed Against Flipkart Under Competition Act

Anmol Kaur Bawa

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