Tussle of e-Tailers: Westland drags Flipkart to Court
The
Recent Fiasco
In
a recent battle between Amazon and Flipkart, Westland Ltd. (the Tata Group-owned publisher of the
`Scion of Ikshvaku’- hereinafter referred to as the Plaintiff) has
dragged Flipkart to Delhi High Court, alleging Copyright and IT (Information
Technology) Act violation with reference to its tie-up with Amazon for
exclusive online sale of Amish Tripathi’s ‘Scion of Ikshvaku’.
The
Plaintiff has stated that it had entered into a two-month exclusive deal with
Amazon to sell the aforesaid book through its online platform. However, the
Plaintiff claimed that Flipkart is selling the impugned book on its website
which attracted the provisions relating to Copyright infringement and violations
under the Information Technology Act.
The
matter at present is sub judice before
the Delhi High Court and in its last hearing on June 30, the Court has not made
any restraint order against Flipkart and has granted two weeks’ time to
Flipkart for filing their Written Statements in the case.
Ghost
from the Past
This
is not the first time that such a suit has emanated before the Court. A similar
dispute between Flipkart and Amazon had emerged in 2014, wherein exclusive sale
agreement was entered between Flipkart and Rupa Publications for the online
sale of Chetan Bhagat’s Half Girlfriend. In the case of Mr. Mohit Manglani v. M/s
Flipkart India Private Ltd. and Ors. (C. No.80 of 2014), Mohit
Manglani had by referring to the exclusive sale agreement between Rupa
Publications and Flipkart for sale of the book Half Girlfriend, alleged such
practices as restrictive and unfair trade practices by e-portals. However, the
CCI (Competition Commission of India) ruled in favour of the e-commerce and
stated that such exclusive selling agreements do not violate the appreciable
adverse effect on competition (AAEC), a requirement for alleging unfair trade practices
under the Competition Act, 2002. The Commission further remarked that “It does not seem that such arrangements
create any entry barrier for new entrants. It seems very unlikely that an
exclusive arrangement between a manufacturer and an e-portal will create any
entry barrier as most of the products which are illustrated in the information
to be sold through exclusive e-partners (OPs) face competitive constraints,”
Exclusive
Selling Agreements and the Competition Act, 2002
In
the light of the recent case, it would be relevant to look into the provisions
of the Competition Act, 2002, which defines Exclusive
Supply Agreement as “any agreement restricting in any manner
the purchaser in the course of his trade from acquiring or otherwise dealing in
any goods other than those of the seller or any other person”.
According to the Act, exclusive supply agreements
under Section 3 are prevented, if the following pre-requisites are satisfied.
i.
That the enterprise is
in a dominant position;
ii.
If it is in a dominant
position then it has abused its dominant position;
iii.
That the exclusive
supply agreement will have an appreciable adverse effect on competition (AAEC)
within India;
The
Act under Section 19(3) further enunciates that the Commission shall
determining whether an agreement has an
appreciable adverse effect on competition (AAEC) shall have due regard to all
or any of the following factors, namely:
a) Creation of barriers to new entrants
in the market;
b) Driving existing competitors out of
the market;
c) Foreclosure of competition by
hindering entry into the market;
d) Accrual of benefits to consumers;
e) Improvements in production or
distribution of goods or provision of services; and
f) Promotion of technical, scientific
and economic development by means of production or distribution of goods or
provision of services to assess the effect of such exclusive arrangement
between manufacturers and e-portals;
Thus, while analyzing exclusive supply
agreements and their validity, the provisions under the Competition Act are
relevant as well.
Traditional
Brick and Mortar Retailers- A Consistent Adversary of E-commerce Sector
A
different facet of this competition involves a fight between the E-commerce
sector and the ‘brick and mortar’ retailers.
Retailers
like Starmark, Crossword etc. have in the past raised issue based on alleged unfair
trade practices and abuse of dominant position with reference to India’s President
Shree Pranab Mukherjee’s book “The
Dramatic Decade: The Indira Gandhi Years”, where a complaint was filed
against Rupa Publication for granting exclusive right of selling the book to
Amazon. The issue was raised before the Commerce Minister Nirmala Sitharaman,
with the Confederation of All India Traders (CAIT) requesting the Minister to
intervene in the matter.
Conclusion
Since,
the advent of E-commerce sector in India, various legal fights have been
initiated against the E-commerce portals, sometimes involving jurisdictional
issues and sometimes trademark related issues. The decisions rendered by the
Judiciary and quasi-judicial authorities in such cases is enabling the
regulation of law governing the legal issues involved in online sale.
