NCLAT Sets Aside CCI Order Closing Case Under Competition Act Against Flipkart; Directs Re-Probe

The Principal bench held that prima facie Flipkart had contravened Section 4 of the Competition Act, 2002 which related to the abuse of dominant position and predatory pricing.

The NCLAT, therefore, set aside the CCI order closing the complaint in terms of Section 26(2) of the Competition Act after holding that no case of contravention of Section 4 was made out.

Justices S.J. Mukhopadhaya, A.I.S. Cheema, Kanthi Narahari referred to the ITAT order in Flipkart India Private Limited vs. Assistant Commissioner of Income-Tax" in ITANo.202/Bang/2018 , where Assessing officer had explained that Flipkart India Private Limited (FIPL) would acquire goods from various persons and immediately sell them at a discount to retail sellers like WS Retail Services Private Limited and others.

It was observed :

"ITAT set aside the Orders passed by the Assessing Officer, confirmed by CIT(A) as they did not fit into the requirements of law under the Income Tax Act. But then the Judgement still shows manner in which OP1 was operating in the market and predatory pricing was resorted to.

The Order also shows that OP1 (Flipkart India) was selling goods to retail sellers like, WS Retail Services Private Limited and others who subsequently, would sell their goods as sellers on internet platform under the name Flipkart.com, i.e. (Flipkart Internet). The Appellant has rightly pointed out there is a link between what OP1 and OP2 were doing. Predatory pricing by OP1 is also pointed out." 

"The Appellant has rightly pointed out there is a link between what OP1 and OP2 were doing. Predatory pricing by OP1 is also pointed out. The facts recorded by Assessing Officer regarding the manner in which OP1 and OP2 were operating is material. The conclusions drawn to impose tax may have been set aside by ITAT; but the facts noticed do make out a prima facie case to have a look under the Competition Act. These were actions by Government Authorities. What happened ultimately in the Appeal before ITAT is not material as far as the issues which are for our consideration."

Earlier in 2018, the All India Online Vendors Association had filed a complaint to CCI against and FIPL and FInPL alleging abuse of market dominance in the wholesale trading of books, mobiles computers and related accessories but was not entertained.

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