The Competition Commission of India (CCI) has raided the office premises of at least eight companies that have business linkages with online retail giant Amazon. Among those raided were Cloudtail and Appario, both of which Amazon has reportedly direct and indirect economic interests including equity ownership.
The latest raid actions of CCI related to an investigation ordered by the Competition watchdog in January 2020, when Confederation of All India Traders (CAIT) affiliate Delhi Vyapar Manch alleged violations of the competition law by e-commerce companies. Allegations included preferential listing, deep discounting, and exclusive arrangements with certain vendors, hurting the business interests of retailers not enjoying preferential treatment in such platform companies.
Cloudtail, which is run by Prione Business Services, is the largest seller on the Amazon India marketplace, driving nearly 80 per cent of the e-tailer’s sales in India.
Amazon had, in December 2021, announced that it was buying out NR Narayanamurthy’s investment firm, Catamaran’s 76 per cent stake in Prione Business Services. Amazon already held the remaining 24 per cent stake in Prione. The transaction meant that Amazon had complete ownership of Cloudtail. In August last year, Amazon and Cloudtail decided to end their partnership and announced that the latter would cease to be a seller from May 2022.
Indian laws prohibit a marketplace operator from being a seller on the platform. This would have meant that Cloudtail cannot be a seller on Amazon platform so long as Amazon was in complete ownership of Cloudtail.
CCI raids
Sources said that the latest CCI searches were carried out at Delhi, Mumbai, and Bengaluru against at least eight companies that are doing business with Amazon. The companies whose locations were searched included Cloudtail, Appario, Consulting Rooms, Shreyans Retail and Konde Products.
Government sources said the searches were intended to ascertain actual linkages between Amazon and these companies following allegations by a group of retailers that Amazon is actually controlling them. Communication between Amazon and the raided firms, their administrative and financial arrangements, and structures are under the glare of CCI, said government sources.
CAIT welcomes move
CAIT Secretary General Praveen Khandelwal said the raids are a welcome step and will surely vindicate the substance of various complaints made by the CAIT against Amazon and Flipkart.
For the past three years, the CAIT has been raising objections against the mal-practices of Amazon and Flipkart and has filed complaints with CCI besides fighting delaying tactics of Amazon and Flipkart in various courts as well, he added.