(Bloomberg) -- India's Supreme Court allowed an antitrust investigation to proceed against Amazon.com Inc.'s local unit and Walmart Inc.-backed Flipkart Internet Pvt. for allegedly abusing their dominance by offering deep discounts and preferential treatment to some vendors.
A three-judge panel headed by Chief Justice N.V. Ramana rejected separate petitions by Amazon and Flipkart seeking to halt the probe. The firms have four weeks to respond to notices from the Competition Commission of India.
“We expect big giants like Amazon, Flipkart volunteering for inquiry and transparency and you don't even want it,” Ramana said. “Inquiry has to be permitted.”
The ruling is another regulatory setback for the e-commerce companies in the largest consumer market that's open to foreign firms. The South Asian nation is tightening regulations for online retailers following years of protests by local brick-and-mortar traders who fear that deep-pocketed global competition could push them out of business.
Amazon, Walmart Learn to Live With Indian Stores, Not Kill Them
The commission had last year started a joint probe on Amazon and Flipkart after an organization of local retailers alleged that the firms abused their dominance through deep discounts, exclusive tie-ups and by backing some vendors.
Amazon and Flipkart deny any wrongdoing and told the court that the panel didn't follow required procedure to start the investigation.
E-commerce in India is expected to reach a total market size of $188 billion by 2025 from about $64 billion now, according to Grant Thornton.
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