India’s antitrust regulator, the Competition Commission of India (CCI), began raids early on Thursday against two prominent domestic sellers of Amazon.com Inc. and others on Walmart’s Flipkart, in response to allegations of competition law violations, according to sources.
Amazon and Flipkart have maintained that they comply with all applicable standards. Still, Indian shopkeepers — among the most ardent supporters of Prime Minister Narendra Modi — have long contended that the platforms’ predatory pricing helps just a tiny number of prominent sellers.
It was Cloudtail and Appario, according to two anonymous individuals who spoke on the condition of anonymity, who were the two Amazon merchants targeted in Thursday’s raids.
According to two other sources, CCI is also conducting raids on Walmart’s Flipkart website, though no specifics have been disclosed.
According to a former CCI officer who spoke to Reuters, “this is a significant step because the CCI generally does not undertake searches in non-cartel cases.”
“Through morning raids to unearth complicated economic activities, the regulator is venturing into uncharted terrain.”
Even though Amazon has an indirect equity position in both sellers raided, neither Amazon nor Flipkart responded to requests for comment within a reasonable amount of time.
Emails sent to Cloudtail, Appario, and the regulatory agency went unanswered for several days.
According to one of the individuals, the CCI ordered an investigation against a corporation with offices in New Delhi and the southern IT hub of Bengaluru in January 2020.
Several anti-competitive practices, including the promotion of preferred vendors on websites and the prioritization of listings by specific merchants, have been accused of being engaged in by both Amazon and its competitor Flipkart in this case. The antitrust investigation is still ongoing.
Amazon has always said that sellers are handled fairly and transparently, which has been the case. Specifically, Amazon states that it “does not grant special treatment to any vendor who sells on its marketplace.”
According to a Reuter’s investigation last year based on Amazon’s internal documents, Cloudtail was one of the sellers on Amazon’s platform that received preferential treatment and was used to dodge regulatory rules.
It appears that Amazon has been assisting these vendors with lower fees and other incentives for several years and helping Cloudtail secure unique alliances with crucial technology businesses, as demonstrated by the data.
According to an investigation, around 35 of Amazon’s more than 400,000 Indian suppliers accounted for roughly two-thirds of all purchases made on the Indian site in 2019. Cloudtail and Appario, two online retailers, accounted for more than a third of those transactions.
The antitrust agency determined that the Reuters report corroborated material that it already had. In August, Amazon and Cloudtail stated that Cloudtail would cease to be a vendor in May 2022.