E-Commerce and Competition Law

Posted On - 26 February, 2026 • By - Aniket Ghosh

Introduction

The rapid expansion of e-commerce in India has raised significant concerns regarding market dominance, fair competition, and regulatory oversight. One of the most prominent legal confrontations in this domain arose when the Competition Commission of India (CCI) initiated an investigation against Amazon and Flipkart, two of India’s largest e-commerce platforms, for alleged anti-competitive practices. This move was challenged before the Karnataka High Court, culminating in a landmark decision that clarified the scope of judicial review over preliminary investigations ordered by specialized statutory authorities.

Informational History of the Case1

This controversy began when DVM (Delhi Vyapar Mahasangh), an organization that represents micro, small and medium sized enterprises filed its original complaint with CCI in January 2020. In the complaint, the DVM alleged that flipkart and amazon engaged in anti-competitive practices contrary to Section 3 and 4 of the competition act of 2002.

On 13 January 2020, the CCI, after considering the information placed before it, passed an order under Section 26(1)2 directing the Director General (DG) to conduct an investigation. Amazon subsequently challenged this order by filing a writ petition before the Karnataka High Court in February 2020. On 14 February 2020, the High Court granted an interim stay on the investigation.

In September 2020, the CCI approached the Supreme Court challenging the interim stay. The Supreme Court remanded the matter back to the Karnataka High Court with directions for expeditious disposal. The proceedings continued before the High Court until 11 June 2021, when the stay order was quashed, allowing the investigation to proceed. Finally, in September 2021, the Karnataka High Court dismissed the writ petitions filed by Amazon and Flipkart.

Complaint by Delhi Vyapar Mahasangh

DVM alleges that Amazon and Flipkart are abusing their market power by entering into vertical agreements with preferred sellers (or choice sellers) using a selective process and engaging in indirect control of the selected vendor. Specifically, during launching an Android or iOS mobile device, these online retail platforms provided preferred sellers with advantages to the detriment of competing sellers.

CCI’s investigation was based on four main practices

  • Exclusive launch arrangements on mobile phones
  • Promotion of preferred sellers
  • Selling their products through deep discounts
  • Listing certain sellers before others

According to CCI, each of these practices raises concerns over potential foreclosure of the market and potential complications regarding the need to compete with others fairly through the use of online marketplaces.

Amazon and Flipkart have presented several arguments to challenge the validity of the CCI’s order before the Karnataka High Court. These two companies argue that the CCI’s order surpasses the goal of the Competition Act, and that the CCI’s decision to initiate an investigation into the actions of Amazon and Flipkart was based on insufficiently established jurisdictional facts proving that the actions of either Amazon or Flipkart significantly prejudicially impacted competition.

Also, they argued that the original informer’s complaint was motivated and initiated by the Confederation of All India Traders, who have previously filed multiple unsuccessful complaints against both Amazon and Flipkart. Additionally, the Petitioners argued that prior to this, the CCI has not followed its past practice of providing a hearing prior to forming an opinion based on evidence.

The companies also argued that the CCI’s order was illegal since it was not based on sufficient evidence, nor was it based on an investigation by the Enforcement Directorate concerning the alleged illegal actions of Amazon and Flipkart. Lastly, the companies argued that the CCI’s order constituted Abuse of Process, inflicting undue hardship upon both Amazon and Flipkart.

The Senior Counsel for Flipkart has stated that exclusivity of selling products is up to the independent choice of the seller and thus the platform of Flipkart should not be liable for those choices made by sellers.

Submissions of the Competition Commission of India

The CCI defended its order by characterizing it as an administrative direction under Section 26(1), which merely initiates a departmental investigation and does not determine rights or impose civil consequences. It was contended that judicial review of such orders is limited and can only be exercised in cases of mala fide intent or abuse of jurisdiction, neither of which had been alleged.

The Commission further submitted that there is no sector-specific regulator governing e-commerce in India and that the allegations raised involved complex issues of inter-platform and intra-platform competition. It was also argued that the source or motivation of the informant was irrelevant, as the Commission’s focus remained on the substantive competition concerns disclosed in the information.

Three main issues were identified by the Karnataka High Court on which they would make their decision:

  1. Is the order made under Section 26(1) of the Competition Act an administrative order?
  2. Is it necessary to give a party a chance to respond to the allegation and to hold a hearing before the investigating authority gives an order to investigate?
  3. Was there a valid basis for the court to intervene in the order of the Enforcement Directorate?

Judgements of the Court

For the first two questions, the Karnataka High Court held that an order made under Section 26(1) of the Competition Act is administrative in nature, quoting authorities such as CCI v. Steel Authority of India Ltd.3 (CCI vs SA India) and CCI v. Bharti Airtel Ltd.4 (CCI vs BA India) which confirmed that the threshold for making a prima facie opinion as to whether or not there has been an infringement is relatively low, and does not involve an extensive analysis of the evidence.

The Court points out that Section 26(1) does not require prior notice or hearing to be given to a person before an order to investigate is made. These types of procedural rules only come into play after the Director General submits a report to the Commission, in accordance with Section 26(4). The preliminary investigation does not produce a civil consequence and is conducted in strict confidence.

With respect to the third issue, the Court noted that the CCI had examined the information in detail and applied its mind before forming a prima facie opinion. Consequently, the Court held that the impugned order did not warrant interference under Article 226 of the Constitution.

Conclusion

In this decision, the Karnataka High Court stated that it would have been premature for the court to get involved in an investigation being conducted by an expert regulatory body at this point in time. The court noted that the review of judicial authority is limited at the initial stages of an investigation and should not try to prejudge matters that are better left to expert regulators.

The judgment reinforces the independence of the CCI but also illustrates the lack of a regulatory framework governing e-commerce in India. The lack of clear guidelines will create a number of issues for parties involved in any type of litigation or regulatory proceedings, as well as adding to attorneys’ and regulators’ uncertainty over the law. A thorough, balanced approach is needed to ensure that competition is maintained in a manner that encourages innovation, consumer welfare and investment confidence in today’s growing digital market.

  1. CCI Order Case no. 40 0f 2019 https://www.cci.gov.in/sites/default/files/40-of-2019.pdf?download=1 ↩︎
  2. Competition Act, 2000, § 19, Acts of Parliament, 2000. * Martin Burn Ltd. v. R.N Banerjee AIR 79 1958 SCR 514 ↩︎
  3. CCI v. Steel Authority of India Ltd. & Anr., (2010) 10 SCC 744 (India) ↩︎
  4. CCI v. Bharti Airtel Ltd. & Ors., (2019) 2 SCC 521 (India). ↩︎