An employee takes stock of stacked products at an Amazon warehouse in Bangalore. Photo: AFP

E-commerce giant Amazon has decided to fight a ruling by India’s competition watchdog. In the Karnataka High Court in Bangalore, Amazon stated that the Competition Commission of India‘s action would cause irreparable damage to the company’s reputation.

In its petition, Amazon said that the commission’s order was passed “without application of mind” and its findings were “perverse, arbitrary, untenable in law.” It has sought an interim stay on the proceedings.

Last month the Competition Commission ordered an investigation against Amazon and the Walmart-owned Flipkart over alleged violations of competition law and certain discounting practices.

Amazon and Flipkart have faced mounting criticism from India’s brick-and-mortar retailers, which accuse the online giants of violating Indian law by racking up billions of dollars of losses to fund deep discounts and discriminating against small sellers. The companies deny the allegations.

The investigation was ordered after a New Delhi-based trader group complained that the e-commerce giants were promoting select sellers and in turn hurting business for other smaller players.

The competition watchdog in its January 13 order had noted mainly four alleged practices by the two e-commerce giants – the exclusive launch of mobile phones, preferred sellers on the platforms, deep discounting and preferential promotion of private labels. It had directed its director-general to complete the investigation and submit the report in two months from the receipt of the order.

Amazon rival Flipkart said that after the competition watchdog ordered a probe, it was “fully compliant” with all laws in India.

The Karnataka High Court is likely to hear Amazon’s petition later this week and the complainant trader group, Delhi Vyapar Mahasangh, has been informed. The trader group will defend its case to ensure the antitrust probe is not quashed or put on hold, the lawyer added.

However, the trader’s lobby accuses Amazon and its rival Flipkart of killing the businesses of small traders by offering deep discounts. Last Wednesday traders staged protests in New Delhi and other cities where Amazon had organized events.

Interestingly, the competition watchdog order was issued barely two days ahead of a visit by Amazon CEO Jeff Bezos to India. During an Amazon event in Delhi, Bezos promised to spend US$1 billion to digitize small and medium-sized Indian businesses. However, these announcements failed to placate the Indian establishment.

Also read: Jeff Bezos given the cold shoulder in India

Commerce and Industry Minister Piyush Goyal said Amazon and Flipkart were “not doing a great favor” by investing billions of dollars in India. Later the minister claimed his statement was misconstrued. He said the government does not have a problem with e-commerce investments within the current rules and regulations for the sector.

“But because of that investment, an unfair competition should not be created for the small stores. They don’t get loans in zero interest rate, they don’t have millions of rupees, they do their business with small investments. We want the investment to come within the set legal criteria,” Goyal said.

During his second visit to India, Bezos received a cold welcome from the Indian government and was denied an appointment with top officials. In contrast, during his first visit to India in 2014, Bezos had a meeting with Prime Minister Narendra Modi.

Political analysts claim Bezos was cold-shouldered because the Washington Post, which he bought in 2013, had been very critical of the prime minister and his policies in India. The daily published several articles critical of the government’s recent decisions, including scrapping Article 370 in Jammu and Kashmir state and the ongoing protests against the Citizenship Amendment Act.

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