High Courts grant interim stay on Competition Commission of India's investigation against the sellers of Amazon Seller Services Private Limited and Flipkart Internet Private Limited
The Karnataka High Court ("KHC"), Madras High Court (MHC) and the Punjab & Haryana High Court ("P&H HC") (together referred to as "High Courts") granted an interim stay on the proceedings initiated by the Competition Commission of India ("CCI") against sellers of Amazon Seller Services Private Limited ("Amazon") and Flipkart Internet Private Limited ("Flipkart").
In January 2020, CCI directed the Director General ("DG") to initiate an investigation against Amazon and Flipkart for alleged contravention of Section 3(4) of the Competition Act, 2002 ("Competition Act") (referred to as the "Prima Facie Order"). As part of the investigation, DG inter alia issued notices to the several sellers of Amazon and Flipkart as 'third parties' and sought extensive information from them.
However, in August 2024, CCI passed an order inter alia, forwarding the copy of a non-confidential version of the investigation report ("DG Report") to Amazon and Flipkart including their sellers ("CCI Order"), and categorising them as an 'opposite party' i.e., changing their status from a 'third party' to an 'opposite party'.
Aggrieved, the sellers filed separate writ petitions before various High Courts to challenge the CCI Order. The sellers, inter alia contended that the Prima Facie Order was only qua Amazon and Flipkart and DG ought to have taken prior approval from CCI before changing the sellers to an 'opposite party'. Accordingly, the impleadment of sellers as an opposite party is in contravention of Regulation 24 of the CCI (General) Regulations 2009 read with Sections 16(1), 26(1) and 41 of the Competition Act.
After hearing the submissions of the sellers, the High Courts granted interim stay on the operation of the CCI Order and all consequent proceedings before CCI.
JSA represented sellers of Flipkart before KHC and P&H HC.
(Source: High Court Orders)
Telangana High Court dismisses writ petition filed by Dr. Reddy's Laboratories Limited challenging CCI's Investigation
The Telangana High Court ("THC"), by way of a judgement dated September 19, 2024, dismissed a writ petition filed by Dr. Reddy's Laboratories Limited ("Dr. Reddy's") challenging the investigation initiated by CCI against it.
Brief Background
On February 7, 2012, CCI directed DG to initiate an investigation against All India Organisation for Chemists and Druggists ("AIOCD"), its affiliated state associations and certain pharmaceutical companies including Dr. Reddy's for allegedly engaging in anti-competitive practice including insisting stockists to procure a No Objection Certificate ("NOC") from state associations/AIOCD prior to their appointment by the pharmaceutical companies. If a stockist was appointed by a pharmaceutical company without an NOC, its products were boycotted from the market in compliance with AIOCD's diktats.
After detailed investigation, DG submitted its investigation report to CCI in April 2024, and subsequently, in May 2024, CCI passed an order ("CCI Order"), inter alia, forwarding the copy of non-confidential version of the investigation report ("DG Report") to Dr. Reddy's and directed it to furnish: (a) the response/objection to the DG Report; and (b) its financial statements. Upon receipt of the CCI Order and the DG Report, Dr. Reddy's discovered that there were no adverse findings in the DG Report against itself.
Aggrieved, Dr. Reddy's filed a writ petition before the THC challenging the CCI Order and the DG Report on the ground that there were no adverse findings against it in the DG Report and the CCI Order was arbitrary and illegal, as it was based solely on the issue of demanding NOC from stockists.
Proceedings before the THC
The THC while dismissing the writ petition, noted that Dr. Reddy's approached it under the writ jurisdiction without first exhausting the statutory remedies available under the Competition Act and that such writ petitions should only be considered in exceptional circumstances such as violation of principle of natural justice or jurisdictional issues.
(Source: THC Order dated September 19, 2024)
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