How do you discount your way into six years of litigation? Start with a complaint from small traders. In January 2020 the Delhi Vyapar Mahasangh, a body speaking for micro, small and medium enterprises, told the Competition Commission of India that Amazon and Walmart-backed Flipkart were breaking competition law, Sections 3 and 4 of the 2002 Act. Three days later, on 13 January 2020, the CCI agreed to look, passing an order under Section 26(1) that handed the file to its Director General for investigation. What happened next became a landmark lesson in how much muscle an expert regulator has before any court will step in.
What the investigators zeroed in on were four habits: exclusive launch arrangements on mobile phones, the promotion of preferred sellers, selling through deep discounts, and the order in which certain sellers got listed ahead of others. The traders’ body alleged the platforms signed vertical agreements with a hand-picked crop of choice sellers and kept indirect control of them; whenever an Android or iOS device launched, those sellers allegedly enjoyed advantages that rival sellers could not touch. By late 2024 the inquiry had stacked up more than 2,700 pages of findings, with accusations spanning preferential search rankings for partnered sellers and pricing deep enough, in the mobile phone segment, to look predatory. Preliminary findings, the reporting added, pointed to possible workarounds of India’s foreign direct investment rules, with preferred sellers effectively moving inventory, and FDI money allegedly absorbing losses to keep an unfair edge over smaller rivals.
The companies fought the investigation itself, not just the allegations. Amazon filed a writ petition in the Karnataka High Court in February 2020 and won an interim stay on 14 February 2020. The CCI took the stay to the Supreme Court in September 2020, which sent the matter back for quick disposal. The stay fell on 11 June 2021, and that September the High Court dismissed the petitions of both platforms outright. Their arguments had been procedural to the core: that the CCI lacked established jurisdictional facts, that the complaint was a motivated one pushed by the Confederation of All India Traders after earlier failures, that no pre-decision hearing had been given, and that the order rested on thin evidence with no Enforcement Directorate inquiry behind it. Flipkart’s senior counsel added a simpler point: exclusivity was the independent choice of sellers, and the platform should not answer for it.
The court’s reasoning, intriguingly, turned on what kind of order Section 26(1) actually is. The judges held it administrative rather than adjudicatory, citing earlier authority that the prima facie threshold is deliberately low and needs no extensive weighing of evidence. No prior notice or hearing is required before an investigation is ordered; those protections arrive after the Director General reports back under Section 26(4). The preliminary probe produces no civil consequence and runs in strict confidence, and the court found the CCI had applied its mind before forming its opinion, so Article 226 offered no basis to interfere. The CCI’s own submissions leaned the same way: its order merely opened a departmental investigation, judicial review was limited to mala fides or jurisdictional abuse, and the informant’s motivation was beside the point when the competition concerns themselves were substantive. It also noted the awkward detail that India has no sector-specific regulator for e-commerce at all.
On the discounts themselves, the defence had a sharp technical point. Predatory pricing, under the statute, requires selling below cost, and the lawyers close to the case saw no evidence that either platform’s prices ever crossed that line, deep as the discounts were. The market framing mattered too: both firms said their practices were normal for the industry and unavoidable in a fast-growing $123 billion e-commerce sector. “To ensure this competition, both offer price discounts and exclusive access, which is commonplace among online and offline retailers in the industry,” one connected lawyer argued, adding that in electronics, demand had simply outgrown supply, with efficient players eating the market share of slower ones.
The consequences could reach the shopping experience itself. If preferential treatment is curtailed, product ranking algorithms may have to change, logistics networks could lose some efficiency, delivery times might slip, and exclusive early launches might thin out, while smaller third-party sellers would finally see more visibility, possibly at the price of higher platform fees. The CCI, which has markedly ramped up its focus on tech in recent years, was expected to keep e-commerce under watch for the foreseeable future. A Digital Competition Bill modelled on European practice was, meanwhile, losing traction; there may be a need to tone the bill down, one lawyer said. As of late 2024 the inquiry itself remained unfinished, with a verdict not expected before that year closed.
Sources
- EXPLAINER: How will the CCI’s investigations into Amazon and Flipkart change e-commerce in India? | Asian Legal Business
- Amazon, Flipkart & CCI: E-Commerce and Competition Law
