The Supreme Court on Monday refused to halt an inquiry into Amazon and Flipkart's business practices, rejecting their demands to pause a Competition Commission of India (CCI) probe.
The CCI had ordered the investigation last year - for allegedly promoting select sellers on their e-commerce platforms and using business practices that stifle competition. The inquiry is also focused on accusations the two circumvent India's laws by creating complex business structures.
The investigation has triggered public spats between the two e-commerce giants and the government. Both companies deny all wrongdoing and have mounted multiple legal challenges,
They have argued that the CCI did not comply with internal criteria for minimum evidence before ordering its probe, and that it has not highlighted any agreement that violates existing laws.
However, a three-member bench led by Chief Justice NV Ramana remained unconvinced with today's arguments, and even said Amazon and Flipkart should volunteer for such investigations.
"We expect organisations like Amazon and Flipkart... big organisations... they have to volunteer for inquiry and transparency. We expect that... and you don't even want (an) inquiry," the Chief Justice said, adding, "You have to submit and inquiry has to be conducted."
The e-commerce giants have been given four weeks to join inquiries against them.
Amazon and Flipkart, which is owned by American multinational retail corp. Walmart, approached the top court after the Karnataka High Court last month dismissed pleas to quash the CCI probe.
In a major setback to their efforts to stall the antitrust investigations, the court told the companies that since they denied all allegations, "they should not feel shy in facing an inquiry".
"The appeals are an attempt to ensure action initiated by the CCI ... does not attain finality," a two-judge bench said, adding, "The appeals are devoid of merit, and deserve to be dismissed."
A report by news agency Reuters cited a 700-page filing by Flipkart that asked the top court to restrain the CCI from asking what the company called an "invasive" investigation.
As part of its investigation the CCI had posed 32 "sensitive" questions to Flipkart, including asking for a list of its top sellers, details of online discounts, and pacts with smartphone makers.
A day after that Amazon also filed an appeal; details of its filing have not been made public.
Brick-and-mortar retailers in India have frequently accused Flipkart of favouring select sellers on its platforms to the disadvantage of other, smaller businesses.
And a Reuters investigation of Amazon documents between 2012 and 2019 suggest it gives similarly preferential treatment to some sellers, and also skirted increasingly tough foreign investment rules that affect e-commerce.
With input from Reuters