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Flipkart says NCLAT order 'erroneous', SC stays measure
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SME Times News Bureau | 02 Dec, 2020
The Supreme Court on Wednesday stayed the National Company Law Appellate
Tribunal's (NCLAT) March 4 order asking the Competition Commission of
India (CCI) to initiate a probe against e-commerce major Flipkart for
alleged use of its dominant position.
The NCLAT had held the
prima facie Flipkart had contravened Section 4 of the Competition Act,
2002 which is connected with the abuse of dominant position and
predatory pricing.
Senior advocate Harish Salve, appearing for
Flipkart, said that the NCLAT did not look at the CCI findings, but
instead relied on the tax department findings and also misread the
findings of the tax tribunal in an unrelated case.
Contending
that the order was passed on erroneous premise that Flipkart had a
dominant position in the e-commerce market, Salve held that there were
many players in this nature of business and it is not correct to label
his client as a dominant player.
A bench headed by Chief Justice
S.A. Bobde and comprising Justices A.S. Bopanna and V. Ramasubramanian,
initially said the judgment of the tribunal is relevant and the bench is
keen to send back the matter to the NCLAT.
Salve, however,
argued that dominant position should enable a player to operate
independently of competitive forces and indicated there were other major
players like Amazon.
"Dominant is not the biggest, but you are big enough to call the shots. This is not the case with Flipkart," he said.
Salve
cited the competition by Amazon to Flipkart in the e-commerce field,
and insisted that if he is not a dominant player then the allegations of
predatory pricing does not apply on Flipkart.
After a detailed
hearing into the matter, the top court issued notice to All India Online
Vendors Association (sellers association), who was on caveat, and the
CCI.
The bench noted that the CCI has rendered a categorical
finding that Flipkart does not have the dominant position and this
finding has not been reversed by the NCLAT. Asking the vendor
association if they were to agree that the NCLAT should have considered
the issues of dominant position, it said: "Then, we can remand back the
matter (to NCLAT)," said the bench.
The counsel for the vendor
association replied her client would want to argue the matter. At this,
the bench stayed the NCLAT order.
On March 4, the NCLAT has set
aside the CCI order absolving Flipkart of unfair practices using its
dominant position and directed it to ask its probe arm to investigate
the allegations.
The NCLAT noted the vendor association had
successfully made out their case. This vendor association in November
2018 had moved the CCI alleging abuse of market dominance by the
e-commerce major.
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