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Amazon And Its Indian Rival Flipkart Gets Temporary Relief In Indian Court


02/16/2020


Amazon And Its Indian Rival Flipkart Gets Temporary Relief In Indian Court
Following a relief bringing court ruling for Amazon.com by an Indian court which stayed an investigation by the country’s anti-trust regulator into the alleged business practice of deep-discounting, preferential listing of sellers and exclusive pacts by the United States based e-commerce company and its Indian rival Flipkart, both the companies also are preparing to make appeals to about scaling back of a proposed tax on third-party sellers on their platforms as set by the Indian government. 
 
The companies alleged that the new tax would hurt the industry if the companies were to comply with the new order.
 
Earlier, the High Court of Karanataka state in Southern India stayed the proposed probe by the Competition Commission of India’s (CCI) against Amazon and Flipkart as the court opined that another investigating agency of the country – the Enforcement Directorate (ED), has already started investigations against the operations of the two companies over allegations that they have violated foreign direct investment (FDI) policy in e-commerce as set by the Indian government.
 
In an earlier case filed by All India Online Vendors Association (AIOVA), the CCI had sought Amazon’s comments, and therefore the regulator should have consulted and talked with the parties in the current case before passing the impugned order, the court also noted.
 
“While we welcome and respect the decision of the High Court of Karnataka, this is just a step in the legal process. We are confident about our compliance,” said an Amazon spokesperson.
 
Investigations over alleged violation of the Indian foreign exchange law were started by the ED against Amazon and Flipkart last year. In January this year, an order to probe the business activities and practices b y Amazon and Walmart-controlled Flipkart was issued by the CCI after a plea by the Delhi Vyapar Mahasangh (DVM). The CCI had said in January: “…it needs to be investigated whether the alleged exclusive arrangements, deep-discounting and preferential listing by the Ops (opposite parties — Flipkart and Amazon) are being used as an exclusionary tactic to foreclose competition”.
 
About 80 per cent of the Indian retailing market is currently under the control of Amazon and Flipkart combined. The tow companies had filed a writ petition in the Karnataka High Court earlier this week seeking the court to issue a star stay order on the proposed investigation by the CCI. While claiming that the findings of the CCI were “perverse, arbitrary, untenable in law”, the companies said that the order to investigate them had been passed without “prima facie application of mind”.
 
In a separate development, Indian e-retailing companies – including Amazon and Flipkart, has also demanded that the Indian government scale back a proposed new tax on third-party sellers that use their platforms.
 
Under the new tax rule, online retailing companies could be forced to pay a 1 per cent tax on every sale that is done on such online platforms starting in April. The new tax proposal is yet to be passed by the Indian government. 
 
“(It) would cause irreparable loss to the entire industry with increased compliance burden,” said the industry body Federation of Indian Chambers of Commerce and Industry (FICCI) on behalf of e-commerce companies. “This will also lead to reduced trading activity.”
 
(Source:www.financialexpress.com & www.reuters.com)