The apex traders' body CAIT India (Confederation of All India Traders) has welcomed the Competition Commission of India (CCI) raids on the offices of Cloudtail India and Appario Retail, which are among the top sellers for Amazon and Flipkart, respectively.
The raids were conducted amid accusations by CAIT that both the companies have violated competition laws by indulging in predatory pricing and other illegal activities. These raids will substantiate the complaint filed by CAIT, Praveen Khandelwal, secretary-general, CAIT said.
"@CAITIndia welcome this much-awaited action of @CCI_India. Seizure of records will substantiate complaints of CAIT. Role of Mr Narayan Murthy should also be scanned for colluding with Amazon by Cloudtail & Appario," he tweets. Amazon holds a 24% stake in Cloudtail, and Infosys founder Narayana Murthy’s Catamaran Ventures holds a 76% stake in the company.
Both the companies, however, have said they follow all the government laws around e-commerce companies. The raids were reportedly held in New Delhi and Bengaluru, a news agency reported, adding that they are being seen as a big setback as CCI usually conducts raids in non-cartel cases only.
Both Amazon and Flipkart are yet to issue statements in this regard.
The apex traders' body has time and again alleged the business model of Amazon and other e-commerce firms should be investigated in a time-bound manner. In the past, CAIT has alleged that Amazon built its business in India by flouting the norms prescribed under the Foreign Exchange Management Act and the Foreign Direct Investment policy.
In December last year, the CAIT had welcomed the CCI order by levying a ₹200 crore penalty on Amazon. The CCI suspended an Amazon-Future deal the regulator had approved in 2019 after stating that Amazon deliberately suppressed the actual scope and purpose of the combination.
Amazon.com NV Investment Holdings LLC (Amazon), a direct subsidiary of Amazon.com Inc, had acquired 49% shareholding in Future Coupons Private Limited (FCPL), which in turn holds 9.82% of the shareholding in Future Retail Limited (FRL). Citing its indirect shareholding in Future Retail, Amazon had opposed the stake sale by its promoters to Reliance Industries.
CCI said Amazon had not disclosed its interest in Future Retail while seeking approval for its investment in Future Coupons. The CCI asked Amazon to pay the penalty in 60 days. Amazon challenged the CCI order in the National Company Law Appellate Tribunal (NCLAT) in January 2022.
CAIT believes though e-commerce trade in India has grown exponentially, and the industry has expanded from $20 billion in 2015 to $84 billion in 2021, the small sellers have not benefited at the same pace. In its white paper on e-commerce released in January 2022, CAIT called for formulation of an e-commerce policy, with a focus on all the stakeholders.