Raids Start At Amazon, Flipkart Premises By Competition Commission of India To Check Market Abuse

Raids Start At Amazon, Flipkart Premises By Competition Commission of India To Check Market Abuse
Raids Start At Amazon, Flipkart Premises By Competition Commission of India To Check Market Abuse

Following accusations of competition law violations, India’s antitrust body launched raids against two top domestic sellers of online retail giant Inc, and some on Walmart’s Flipkart on early Thursday.

Why Would This Happen?

For a long time, Indian retailers have contended that Amazon and Flipkart platforms benefit a few big sellers.

Though the companies say that they comply with all Indian laws, they are being  accused of setting predatory pricing with a few big sellers.

Thursday’s raids figured the two Amazon sellers – Cloudtail and Appario, according to the sources on condition of anonymity.

Some sellers on Walmart’s Flipkart platform were also being raided by officers of the Competition Commission of India (CCI), as the information provided by two other sources.

But, there were no immediate details.

A Significant Development

 A former official of the competition regulator said, “This is a significant development as generally CCI doesn’t do searches in non-cartel cases,”.

Adding that “Doing dawn raids to unearth complex economic activities is a new domain for the regulator.”

Interestingly, Amazon having an indirect equity stake in both the sellers raided did not immediately respond to a request for comment.

Similarly, Flipkart also did not respond on this subject, so did Cloudtail, Appario and the regulator.

Anti-competitive Practices

For a long time, Amazon and rival Flipkart have faced accusations of anti-competitive practices.

This included promoting preferred sellers on websites and giving priority to listings by some sellers. 

That being said, the antitrust investigation continues.

In its defense, Amazon has said it “does not give preferential treatment to any seller on its marketplace,” and “treats all sellers in a fair, transparent, and non-discriminatory manner” previously.

In contrast to this, a Reuters investigation last year indicated that based on Amazon internal documents, the e-commerce giant had given preferential treatment for years to a small group of sellers on its platform.

The list included Cloudtail, and used them to bypass Indian laws.

Further, it indicates that Amazon had for years helped these sellers with discounted fees, among other advantages, as well as helping Cloudtail strike special deals with big tech firms.

Interestingly, about 35 of Amazon’s more than 400,000 sellers in India in 2019 accounted for around two-thirds of sales on its India website, as per the investigation findings. 

Further, the two sellers, Cloudtail and Appario, contributed 35% of the platform’s sales.

The anti-trust body informed a court the Reuters report corroborated evidence it had received against Amazon.

In response to this, Amazon and Cloudtail decided the latter would cease to be a seller from May 2022 in August.

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