Cloudtail drives nearly 80 per cent of Amazon’s sales in India REUTERS | Photo Credit: Abhishek Chinnappa
Raids in Delhi, Mumbai, and Bengaluru on a complaint that certain Amazon-owned sellers enjoyed preferential treatment on the e-tailer’s platform
The Competition Commission of India (CCI) has raided the offices of at least eight companies that have business linkages with online retail giant Amazon. Among those raided were Cloudtail and Appario, companies in which Amazon is said to have direct and indirect economic interests, including equity ownership.
CCI’s latest raids relate to an investigation ordered by the competition watchdog in January 2020, following a complaint by Delhi Vyapar Manch, an affiliate of the Confederation of All India Traders (CAIT), alleging violation of the competition law by e-commerce companies. The 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 2021, Amazon and Cloudtail decided to end their partnership and announced that the latter would cease to be a seller from May 2022. Sources said that the latest CCI searches were carried out at Delhi, Mumbai and Bengaluru. The other companies whose locations were searched included 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 was actually controlling them.Communication between Amazon and the raided firms, their administrative and financial arrangements, and structures are under the glare of CCI, said governmentsources.
CAIT welcomes move
CAIT Secretary General Praveen Khandelwal said the raids are a welcome step and will vindicate the substance of various complaints made by the CAIT against Amazon and Flipkart.
For the past three years, CAIT has been protesting against the malpractices of Amazon and Flipkart and has filed complaints with CCI besides fighting the delaying tactics of the e-commerce players in various courts, he added.