InGovern Research Services, a corporate governance advisory firm, has moved the Finance Ministry against the Competition Commission of India (CCI) move to declare the third-party sellers, brands and their officers as accused in the anti-competition case against Walmart’s Flipkart and Amazon.

Moreover, InGovern said the CCI’s decision to file a transfer petition in the Supreme Court to consolidate all High Court cases raises serious concerns. The move disregards the significant time and effort that High Courts have already devoted to these cases and risks further injustice by clubbing together matters that involve distinct contexts and circumstances, it said.

In a letter written to Nirmala Sitaraman, Finance Minister, InGovern said under the Competition Act, the DG (Director General) does not possess unilateral authority to add sellers as accused and that too without prior notice or an opportunity to defend themselves undermines the principles of natural justice and fair legal process.

CCI challenges sellers

On January 13, 2020 the CCI directed the DG to investigate allegations of anti-competitive practices against Walmart’s Flipkart and Amazon. As part of this investigation, the DG sought information from certain sellers in the capacity of third parties/ witnesses.

Throughout the investigation, the sellers participated under the assumption that they were merely witnesses, without any legal liabilities or risks of penalties sellers were not informed that they could potentially be treated as accused, said InGovern in the letter to the FM.

However, in its August 28 order, the CCI unexpectedly declared the third-party sellers and brands and their officers as accused, extending the scope of the investigation beyond the initial directive.

The sellers were not informed of their potential liability and were denied the opportunity to present their case or exercise their rights as potential accused parties. This procedural lapse has been acknowledged by the Karnataka High Court and other High Courts, which have granted interim injunctions to protect the sellers’ interests and address the procedural violations, it said.

Having already advanced in its arguments, the Karnataka High Court will be in a better position to handle a consolidated hearing of related cases, said InGovern.

This issue not only impacts the sellers and brands involved but also has broader implications for competition law in India. The remit of the CCI is to ensure fair competition and prevent anti-competitive behaviour that could harm customers.

However, the current approach risks detracting from this objective. Customers ultimately benefit from better pricing, improved access and wider availability of products—a result of fair competition and balanced regulatory oversight.

The actions of the CCI must align with its mandate to prevent monopolistic practices, promote customer welfare and avoid any perception of overreach or procedural unfairness, it said.