The bench told Flipkart’s lawyer that it wanted to look into whether the company was misusing its dominant market position by hurting competition.
NEW DELHI: The Supreme Court of India on Tuesday raised serious concerns about Flipkart, saying the e-commerce company is known for “creating monopolies“. The Court also said it is worried about the future of smaller businesses competing in the market.
A bench of Justice Surya Kant and Justice N Kotiswar Singh was hearing a case related to an order passed by the National Company Law Appellate Tribunal (NCLAT).
The NCLAT had directed the Competition Commission of India (CCI) to start a fresh probe against Flipkart for allegedly misusing its dominant position in the market.
To help with the case, the Supreme Court appointed an amicus curiae—a legal expert who will assist the Court in understanding the matter better.
The judges were surprised to see that the complainant in the case—All India Online Vendors Association (AIOVA)—was missing from the hearing. The lawyers representing AIOVA told the Court that they had no instructions from the organisation.
Advocate Udayaditya Banerjee, who appeared for AIOVA, informed the bench,
“It was possible that the organisation was disbanded or no longer existed.”
Despite AIOVA’s absence, the Court made it clear that it still wanted to examine the matter in full detail.
The bench told Flipkart’s lawyer that it wanted to look into whether the company was misusing its dominant market position by hurting competition.
“We want big players to come and invest here but at the same time we are worried about the dragon’s mouth… it is a serious issue and we have to keep the interest of consumers and small players in mind. Some balancing authority is needed,”
the bench said.
Flipkart’s lawyer argued that their platform had actually helped small vendors grow by giving them access to a national customer base.
But Justice Surya Kant was not fully convinced. He responded by saying that Flipkart’s big discounts were affecting small traders in a negative way.
“Sometimes Flipkart offered so much discount that it disrupted the business of small players and the balance of the market,” said Justice Kant.
The Court then asked Advocate Banerjee to continue assisting in the case to make sure both sides are represented fairly.
“Otherwise it would be an uneven fight,” the bench observed.
The judges also said that even if AIOVA was no longer available or active, the Court would still go ahead and review the case properly.
In another important remark, the Court questioned why the CCI, which is a quasi-judicial authority, was being represented in court through lawyers.
“It has passed the order, good or bad. It’s (CCI) job is over. Why should the authority be here in a case? Tomorrow, we can’t ask the high court to be here in every case,”
Justice Kant stated.
The Court was told that the CCI was appearing because of a previous Supreme Court order that required it to do so in every case.
The matter will now be heard again in August.
This case began after AIOVA filed a complaint in November 2018 with the CCI. AIOVA accused Flipkart of abusing its market dominance. The complaint was against both Flipkart India Pvt Ltd (which deals in wholesale trade of electronics and books) and Flipkart Internet Pvt Ltd (which runs the online marketplace).
Earlier, the CCI had rejected the complaint and gave a clean chit to Flipkart. But on March 4, 2020, the NCLAT set aside that decision. It directed the CCI to reopen the investigation and asked its Director General to look into the charges again.
Now, with the Supreme Court getting involved, the issue has become even more significant for India’s fast-growing e-commerce sector.
