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Amazon India faces new anti-competition charge

Amazon has invested USD 6.5 billion in its India business as of now.

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The All India Online Vendors Association (AIOVA), which claims to represent more than 2,000 online sellers in the country has filed a complaint against Amazon India, alleging the e-commerce major gives preferential treatment to its seller entities such as Cloudtail India Pvt Ltd, Amazon Seller Services, Amazon Retail, and Amazon Wholesale, firms in which it owns stakes.

In its filing to the Competition Commission of India (CCI), AIOVA said, “The anti-competitive arrangement (wholesale units selling to Cloudtail and then listing them at a discount)…is causing foreclosure of competition by driving independent sellers out of the market, resulting in an appreciable adverse effect to competition in India.”

According to a Times of India report, CCI has accepted the complaint. Over the next few weeks the anti-trust body might start a probe and summon Amazon India executives to clarify on the allegations.

According to AIOVA, Amazon Wholesale, which is its B2B unit, buys products in bulk worth millions of dollars at a lesser price from manufacturers and sells it to its fully-owned retail subsidiary Amazon Retail and Cloudtail, the largest third-party seller on Amazon India. Due to this arrangement, both Amazon Retail and Cloudtail are able to sell products at a cheaper rate compared to other sellers on Amazon.in.

Cloudtail is a subsidiary of Prione Business Services, a joint venture between Catamaran Ventures, the family office of Infosys co-founder Narayana Murthy and two Amazon entities: Amazon Asia Pacific Resources and Amazon Eurasia Holdings. To comply with India’s FDI regulations, Amazon reduced its holding in Cloudtail from 49% to 24% in February last year.

“Amazon.in is a pure 3rd party marketplace. Sellers on Amazon.in have the absolute discretion to decide what products to sell and their prices. Amazon is compliant with all relevant laws of the land and operates the marketplace with a high degree of transparency and uniformity,” an Amazon spokesperson said in a statement.

This is not the first time that an Indian retailer association has lodged a complaint against Amazon India and Flipkart. In January this year, a group of physical retailers association called Delhi Vyapar Mahasangh, a group that represents small and medium business houses traders dealing in smartphones and electronic accessories, had asked CCI to probe both the e-tailers claiming they have been abusing their dominant position to get into an exclusive partnership with electronics manufacturers, especially smartphone brands to launch their recent models on their platforms first.

The recent complaint comes at a time when Amazon India and Flipkart are looking forward to the festive season sale starting September-end, which it hopes will give a boost to its overall revenue this year. Last year, Flipkart and Amazon India collectively sold products worth USD 4.3 billion during their respective festive season sales.