Bengaluru: A group of e-retailers operating on major platforms like Amazon and Walmart-backed Flipkart argued before the Karnataka High Court (HC) on Wednesday that the investigation by the Competition Commission of India (CCI) into alleged anti-competitive practices exceeds the regulator's statutory authority, media reports said.

The e-retailers, including Rocket Kommerce LLP and Sane Retail, have requested exclusion from the probe, which the court had temporarily stayed earlier this month. The case is being heard by a single bench led by Justice Hemant Chandangoudar, reported Moneycontrol.

The CCI launched its probe in 2020 to examine claims that Amazon and Flipkart engaged in practices like favoring certain e-retailers.

During the investigation, the CCI’s Director-General (DG) reportedly uncovered connections between the platforms and these e-retailers, designating them as “opposite parties.”

The e-retailers have contested this, arguing that their inclusion violated procedural rules, as the DG did not secure CCI approval before altering their role in the investigation.

As per CCI regulations, the DG is prohibited from expanding the scope of a probe beyond what the Commission originally mandates.

Requests for comments from the CCI, Amazon, and Flipkart went unanswered at the time of publication.

The case has gained traction following Enforcement Directorate (ED) raids on some of the e-retailers under investigation.

The ED is conducting a parallel inquiry under the Foreign Exchange Management Act (FEMA), alleging that Amazon and Flipkart circumvented foreign ownership restrictions in the retail sector by indirectly controlling certain e-retailers.

The platforms are accused of favoring these entities, in potential violation of Indian competition laws that mandate equal treatment for all e-retailers.

Alleged links between the platforms and preferred sellers are classified as vertical agreements, strengthening the CCI’s case.

The CCI has also scrutinized other tech platforms, such as food and hotel aggregators, and Google Play, for allegedly granting preferential treatment to specific entities.

The outcome of this case could set a significant precedent for e-commerce giants’ business practices in India, as regulatory scrutiny continues to escalate.