Delhi Vyapar Mahasangh, CCI defend order to probe Amazon, Flipkart
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The Delhi Vyapar Mahasangh (DVM), a group representing small and medium business houses, on Thursday, told the Karnataka High Court that India’s anti-trust regulator had found merit in its complaint to order a probe against America-based Amazon.com.
K.G.Raghavan, the senior counsel appearing for the DVM said that he was not going into the merits but that his complaints to the Competition Commission of India (CCI) on alleged preferred sellers, deep discounts or adverse affect on competition was case enough for an investigation.
“The case that DVM presented before the CCI and CCI saw the information and merit to order an investigation,” said one person directly aware of the developments, requesting not to be named.
The senior counsel for DVM said that it was a case where Amazon was “flexing its muscles” at the law of the country as the order was to probe if the ecommerce’ practices have any adverse effect on competition and not on jurisdiction.
The CCI also said that it did have the jurisdiction as it was not questioning source of funds under foreign direct investment (FDI) or ownership of Amazon.com but questioning only ‘certain practices’ that has a bearing on competition.
Amazon and Walmart-owned Flipkart are facing a CCI probe over allegations of offering deep discounts, preferred listings, promotion of private labels and exclusive partnerships with phone brands that had a bearing on competition.
Amazon’s India unit filed the writ petition on Monday seeking a stay on the probe ordered by the CCI for alleged violations of competition law.
Amazon and its rival Flipkart have come under increased scrutiny over allegations that it offers deep discounts, uses preferred sellers related to the company and misuse of its dominant position that adversely impacts competition and puts small businesses at a disadvantage to capture bigger market shares.
DVM argued that companies like Cloudtail India, owned by Prione Business Services, a joint venture between Infosys founder N.R. Narayana Murthy’s Catamaran Ventures and Jeff Bezos’ Amazon as well as Appario Retail Private Ltd, owned by Frontizo Business Services Private Limited, a joint venture between The Patni group and Amazon were considered ‘preferred sellers’. This, the counsel said was like the “tentacles of an Octopus” that were all related to each other.
The informant had alleged the existence of ‘vertical arrangements between Flipkart and its preferred sellers as well as Amazon and its preferred sellers “which leads to a foreclosure of other non-preferred sellers from the online marketplace.” The informant adds that these preferred sellers also “alleged to be affiliated with or controlled by Flipkart/Amazon either directly or indirectly.”
The counsel argued that the head of investigations would conduct a probe whether the allegations were right or wrong but there was no reason to stop the investigation itself.
Amazon is appealing to get an interim order to stop the probe. Arguments will continue on Friday.
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