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CCI raids top Amazon, Flipkart sellers as part of antitrust probe: Report

Both platforms stand accused of doling out preferential treatment to few sellers.

The Competition Commission of India (CCI) on April 28 conducted raids in Delhi and Bengaluru against top sellers on Amazon and Flipkart in relation to its anti-trust investigation, Reuters reported. The two Amazon sellers that were raided are Cloudtail and Appario, but there is no information on the Flipkart sellers that were targeted, the report said.

“This is a significant development as generally CCI doesn’t do searches in non-cartel cases,” a former CCI official told Reuters.

Cloudtail and Appario are the two largest sellers on Amazon India and the e-commerce company has a stake in both of them. As a result, both the sellers have been at the centre of many accusations levied against Amazon. Cloudtail, however, is set to wind down by the end of May.

Why is CCI raiding Amazon, Flipkart sellers?

CCI initiated a probe into the multiple allegations against Amazon and Flipkart in January 2020. Although the investigation was immediately put on hold for over a year and a half due to legal challenges by the two platforms, the Supreme Court in August last year allowed CCI to resume the investigation, following which the antitrust watchdog said that it will expedite proceedings.

CCI’s probe against Amazon and Flipkart is to look at four alleged violations:

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  1. Exclusive launch of mobile phones
  2. Promoting preferred sellers on their websites
  3. Deep discounting practices
  4. Prioritising some seller listings over others

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 alleged that Amazon has certain agreements with selected sellers like Cloudtail and Appario and that it gives these sellers unfair preferential treatment over others. Since then, multiple other retailer bodies like Confederation of All India Traders (CAIT), Swadeshi Jagaran Manch (SJM), and All India Online Vendors Association (AIOVA) have also repeatedly accused Amazon and Flipkart of engaging in preferential treatment to select sellers as well as other anti-competitive practices.

A Reuters investigation revealed in February last year that Cloudtail and Appario account for nearly 35 percent of the sales on Amazon, and in total, 35 of Amazon’s more than 4,00,000 sellers in India accounted for two-thirds of the sales on the platform.

The investigation, which was based on internal documents of the e-commerce company, also revealed that Cloudtail was referred to as “SM” or “Special Merchant,” despite Amazon publically claiming that Cloudtail receives the same privileges as the other sellers on the platform.

“The internal Amazon documents contradict those claims, revealing how the e-commerce giant has helped a small number of sellers prosper, giving them discounted fees and helping one cut special deals with big tech manufacturers such as Apple Inc. The documents also show that the company has exercised significant control over the inventory of some of the biggest sellers on Amazon.in.” — Reuters February 2021 report

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