The raids by the antitrust body were launched on Thursday
The exact nature of the alleged violation was not clear
Recently, Cloudtail reportedly sent contract termination notices to its vendors as it will cease operations in May
The Competition Commission of India (CCI) on Thursday has conducted raids at offices of Amazon India’s two top sellers, Cloudtail and Appario, for alleged cases of competition law violation.
However, the exact nature of the alleged violation was not immediately clear, according to a report by news agency Reuters. An email sent to Amazon on the issue did not elicit any response at the time of publishing the article.
While the ecommerce giant has an indirect equity stake in both the sellers, the Jeff Bezos-owned company has often been alleged for favouring a group of preferential sellers.
Back in 2021, another Reuters report alleged that the ecommerce platform hid the fact that 35% of its India platform sales revenue in early 2019 came from just two sellers in which it had indirect equity stakes. Moreover, a group of 33 sellers on the Amazon India platform accounted for nearly two-thirds of the online sales.
It is to be noted that Cloudtail will cease its operations in India in May. Last year, Amazon India and Infosys cofounder NR Naryana Murthy’s Catamaran decided not to renew their contracts for joint venture, Prione Business which owns Cloudtail India.
The announcement came soon after the Supreme Court gave a nod to antitrust regulator Competition Commission of India to continue its probe into Flipkart and Amazon for alleged anti-competitive practices.
Recently, Cloudtail reportedly sent contract termination notices to its vendors. The notice has informed vendors that Cloudtail would stop listing and selling products on Amazon marketplace in the near future.
“Cloudtail was a preferential seller on Amazon. While Cloudtail itself is a seller, it does not have a series of sellers. So, it hardly makes any difference whether the company is selling Amazon products or not. When Cloudtail will not be a seller anymore on Amazon after their agreement expires, then the ecommerce platform will find other preferential sellers,” Confederation of All India Traders (CAIT) secretary-general Praveen Khandelwal told Inc42.
Cloudtail India reported a 170% rise in its net profit for financial year 2021 (FY21) at INR 182.7 Cr. On the other hand, Appario’s net profit marginally fell to INR 54 Cr in FY21 from INR 66 Cr in the previous year.
