Indian Seller Association Knocks CCI Doors Against Amazon

A new antitrust case against Amazon India has been filed with the Competition Commission of India (CCI). The case against Amazon India accuses it of anti-competitive practices by preferential treatment of seller entities like Cloudtail, Amazon Retail and  Amazon Wholesale, where it either holds a stake or they are its group companies.

In the latest case, reported by Reuters, the All India Online Vendors Association (AIOVA), members of which sell goods on Amazon and Flipkart, alleged that Amazon engages in unfair business practices. CCI has admitted the complaint, filed on August 10, meaning it will study the case being made against Amazon and would decide on the next course of action accordingly. This includes summoning Amazon India executives to clarify on the allegations and even starting a probe, said Times Of India. 

The case presents a new regulatory challenge for Amazon in India, where it has committed $6.5 billion in investment but is battling a complex regulatory environment. In January, the Competition Commission of India (CCI) had ordered an investigation of Amazon and rival Flipkart, owned by Walmart, over alleged violations of competition law and certain discounting practices, which Amazon is challenging, according to court filings.

AIOVA has alleged that Amazon India’s wholesale arm buys goods in bulk from manufacturers and sells them at a loss to sellers such as Cloudtail. Such sellers then offer goods on Amazon India at big discounts.

“This anti-competitive arrangement … is causing foreclosure of competition by driving independent sellers out of the market,” reads the filing at CCI.  

AIOVA also alleged in the complaint that deep discounts and lack of platform neutrality on the marketplace was driving existing competitors out of its marketplace and creating barriers to new entrants in the marketplace resulting in the foreclosure of competition.

Meanwhile, in a statement to Reuters, Amazon said that it complies with all laws and its India website is a pure third-party marketplace where sellers have discretion to decide product prices. Amazon’s statement also said its wholesale unit allows businesses to buy products and anyone can register on it.

The complaint follows the Indian government’s move to tighten regulations last year to deter steep discounts, but small sellers still say Amazon uses complex business structures to bypass restrictions, an allegation the company denies.

Speaking to Reuters, a Cloudtail spokeswoman said it was in “compliance with all applicable laws in its operations.” Cloudtail, one of Amazon’s biggest India sellers, pays a fee to Amazon of 6.3% for electronic products, while independent sellers pay roughly 28.1%, the group alleged in its filing.

Amazon’s Problems Mount

The fresh controversy comes in the backdrop of the All Indian Organisation of Chemist and Druggists (AIOCD), writing to Jeff Bezos calling out the launch of Amazon’s epharmacy business as “illegal”. The association, which has nearly 850K Indian chemists, noted that the government had only allowed sale of medicines online during the lockdown as it amounted to an emergency, and that home delivering medicines would be in contempt of the Delhi high court’s decision that put a stay on online pharmacies. Besides this, the association noted that there is no criteria for epharmacies under the Drugs and Cosmetics Act of 1940.

Earlier, in February 2020, the CCI had failed to find any evidence to prove Amazon had exclusive deals with smartphone manufacturers. The CCI had ordered a probe on a complaint filed by Delhi Vyapar Mahasangh, which alleged that Amazon gave preferential treatment to select sellers and offer deep discounting as well. The association emphasised that such practices were creating an anti-competitive environment, giving the ecommerce players unfair advantage.