The All India Online Vendors Association (AIOVA), a trade union representing online sellers, has filed an antitrust suit against Amazon India, alleging preferential treatment to some sellers, and predatory pricing, Reuters reported. The case has been filed with the Competition Commission of India, which as per Reuters will review the case in the coming weeks. An AIOVA spokesperson confirmed the antitrust lawsuit to MediaNama, and we have reached out the group’s lawyer for more details.
According to AIOVA’s legal filing, which Reuters reviewed, the body alleged that Amazon India buys goods in bulk from manufacturers and then sells them at a loss to sellers such as Cloudtail, who then offer the same goods on Amazon.in at heavily discounted prices. “This anti-competitive arrangement … is causing foreclosure of competition by driving independent sellers out of the market,” AIOVA said in its lawsuit, which per Reuters, was filed on August 10.
When contacted, Amazon India gave the following statement to MediaNama:
“Amazon.in is a pure 3P marketplace. Sellers on Amazon.in have the absolute discretion to decide what products to sell and their prices. Amazon is compliant to all relevant laws of the land and operates the marketplace with high degree of transparency and uniformity.
AWIPL operates a B2B marketplace (amazondistribution.in) where 3.5 lakhs of small and medium offline sellers buy different category of products for resale to customers or for institutional consumption. Any B2B seller can register and purchase from Amazon distribution.” — Amazon India
The organisation’s lawsuit reportedly includes screenshots of product listings on Amazon India’s website showing that some product listings such as groceries and detergents were discounted by as much as 45%, compared to retail prices. The group also alleged that Cloudtail pays Amazon a fee of a little over than 6% compared to the 28% that smaller sellers have to pay. Forbes reported that AIOVA has also expressed concerns about Amazon’s use of its own private label brands like Solimo and Presto to undercut sellers on the platform.
According to India’s rules on FDI in e-commerce, which were enacted in February 2019, marketplaces, such as Amazon and Flipkart, cannot exercise control or ownership over the inventory of vendors on their platforms. If they exercise any kind of control over the inventory, they’ll be considered as an inventory-based e-commerce platform. The rules also say that if a marketplace has an equity stake in a vendor/seller, or if it controls its inventory, the vendor is not permitted to sell its products on the marketplace.
In January, CCI had ordered a probe into alleged competition law violations by Amazon and Flipkart. The CCI had initiated the probe following a complaint filed by the Delhi Vyapar Mahasangh (DVM), a group of MSME (Micro, Small and Medium Enterprises) smartphone traders. DVM had accused that Amazon has certain agreements with sellers (that are allegedly controlled by the company) and that it gives these sellers unfair preferential treatment over others. Following CCI’s investigation, Amazon approached the Karnataka High Court, seeking a stay on the probe, and the court gave it interim relief.
Amazon is also facing antitrust probes in Canada and Germany. Senators in the US also grilled the company’s founder Jeff Bezos, during a Congressional antitrust hearing, over its treatment of third-party seller data, among many other things.