ED To Summon Flipkart, Amazon Over FDI Rules Violations

SUMMARY

Following recent reports around the office raids at Amazon and Flipkart, the ED is set to summon executives of the both ecommerce giants over alleged violations of foreign director investment laws

ED is also said to be in the process of analysing business data from sellers and their dealings with the ecommerce companies in the last five years if not longer

Earlier this year, the Competition Commission of India (CCI) found both giants guilty of violating competition laws for giving preference to select sellers on their platforms

Following recent reports around the Enforcement Directorate (ED) raiding offices of Amazon and Flipkart sellers, the agency is reportedly set to summon executives of both ecommerce giants over alleged violations of foreign direct investments (FDI) laws pertaining to the sector.

As per a Reuters report that quotes an unnamed government source, the ED plans to summon executives after reviewing documents seized from the sellers during the raids.

The raids were conducted in relation to a probe into alleged violations of the Foreign Exchange Management Act (FEMA) in offices of select sellers in Delhi NCR, Mumbai, Bengaluru, Gurugram and Hyderabad.

The report claimed that these searches substantiated the agency’s investigation into FDI violations.

Additionally, the ED is also said to be in the process of analysing business data from sellers and their dealings with the ecommerce companies in the last five years if not longer.

Regulators have circled Flipkart and Amazon India recently, in relation to the dynamics between the platform and the sellers listed on the marketplaces.

Earlier this year, the Competition Commission of India (CCI) found both giants guilty of violating competition laws for giving preference to select sellers on their platforms.

India’s antitrust watchdog ordered Flipkart and Amazon to share their financial statements, with the amount of fine set to be determined after the CCI’s hearing of the two companies in the four-year long case, as per reports, resulting in a penalty of up to 10% of their global annual turnover or income.

Meanwhile, there have also been criticisms arising from the Confederation of All India Traders (CAIT) that CCI’s inaction and alleged delay in handling the investigations and violations of the ecommerce majors Amazon and Flipkart.

The developments are especially pertinent given the shifts in the ecommerce landscape in the past year, as quick commerce companies have gained prominence and scaled up rapidly. While Flipkart has responded with its own quick commerce play, Amazon is on course to launch its product later this year, as per reports.