Current AffairsIndia

Investigation by ED under FEMA does not bar probe by CCI

An investigation by the Enforcement Directorate (ED) under the Foreign Exchange Management Act, 1999 (FEMA) does not bar another investigation by the Competition Commission of India (CCI) for violations of Competition law, the CCI argued before the Karnataka High Court in the Amazon-Flipkart case.

Additional Solicitor General Madhavi Divan told Justice PS Dinesh Kumar that Amazon is looking to twist the pendency of an ED investigation into its working to ward off CCI’s probe into alleged violations of Competition Law by the e-commerce giant. This is abuse of process, she added.

Divan further submitted that there can be parallel investigation under FEMA.

The outcome may be different but there is no bar…. Standards of proof and adjudication are very different under the both Acts,” she said.

Divan refuted the submissions of Amazon on the Foreign Direct Investment (FDI) Policy stating that even if it is assumed that “there is a violation of the FDI Policy, it does not necessarily mean that there is a violation under the Competition Act or vice versa.”

Earlier, Senior Advocate Gopal Subramanium, appearing for Amazon, had submitted that CCI was overstepping its jurisdiction by ordering a probe into the e-commerce giant. It was his submission that only the ED can look into violations of FDI Policy, and not CCI.

Countering the argument raised by Amazon on the ‘malafide’ of the informant, Divan yesterday submitted that Section 45 of the Competition Act is a deterrent to persons who provide information to CCI in a malafide or frivolous manner.

Apart from imposing a fine of upto Rs 1 crore, CCI can also pass other orders against malafide informants, Divan added.

Petitioner should not overplay the issue of informant as Section 45 takes care of it.

ASG Madhavi Divan

She further argued that CCI will have to weigh the value and essence of the information received.

“CCI functions are inquisitorial as opposed to adjudicatory functions. Doors of CCI are to be kept wide open, we have to weigh the value and substance of the information, to find out if there is a prima facie case and order investigation.”

Divan placed reliance on the Supreme Court judgment in Samir Agrawal to argue that any person can approach the CCI with information, and that such person need not be a complainant or a consumer, as was required earlier. This is essentially because proceedings under Competition Law are ‘in rem’, she said.

The matter will be heard next on March 15.

The Court is hearing two petitions moved by Amazon and Flipkart seeking to quash the probe ordered by CCI against them for alleged violations of Competition Law.

Over a year ago, the Court had granted interim relief to Amazon by staying the investigation. Shortly thereafter, the same relief was granted to Flipkart as well.

Last week, the Court had asked the CCI to prove whether it had the jurisdiction to order an investigation into the alleged anti-competitive conduct of Amazon and Flipkart.


Via Bar & Bench
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