Supreme Court sets aside NCLAT order of CCI probe against Flipkart

The Supreme Court on Tuesday set aside a 2020 order of the National Company Law Appellate Tribunal (NCLAT) directing the director general of the Competition Commission of India to probe alleged violations of competition law by e-commerce giant Flipkart.

A bench comprising Chief Justice Surya Kant and Justices Joymalya Bagchi and Vipul M Pancholi remanded the matter back to the NCLAT for fresh adjudication.

It held that the NCLAT must reconsider the case after taking into account Flipkart’s contention that the tribunal had relied on observations made by an assessing officer in income tax proceedings, which were subsequently set aside by the Income Tax Appellate Tribunal (ITAT).

The court clarified that all issues have been left open for reconsideration by the NCLAT.

“We request the NCLAT to decide the appeal afresh, keeping in mind the principles stated by this Court in a catena of decisions, including Coal India Ltd. The parties will be at liberty to raise their respective contentions for the purpose of determining whether a prima facie case is made out, and if so, whether further remand of the case to the CCI is warranted,” it ordered.

Appearing for Flipkart Internet Pvt Ltd, senior advocate Abhishek Singhvi said that there was no finding that the company was a dominant player in the relevant market or that it had abused any dominant position.

He argued that the NCLAT’s order was primarily based on certain observations made by an assessing officer during income tax proceedings, which were later overturned by the ITAT.

Singhvi further submitted that the CCI itself had concluded that Flipkart was not a dominant player in the market.

He contended that Amazon was the dominant entity in the online marketplace and relied on the tests laid down by the apex court in the Coal India judgment, arguing that none of those criteria were satisfied in Flipkart’s case.

At this stage, the bench proposed remanding the matter to the NCLAT so that it could examine factors other than the assessing officer’s findings.

The dispute traces back to March 4, 2020, when the NCLAT set aside an earlier CCI order that had closed a complaint filed by AIOVA seeking a probe against Flipkart.

The appellate tribunal had held that a prima facie case existed against Flipkart for contravention of Section 4 of the Competition Act, 2002, which deals with abuse of dominant position, including predatory pricing. Consequently, it had directed a probe by the Director General of the CCI.