Following claims of competition law violations, India’s antitrust body started raids early on Thursday against two top domestic sellers of online retail giant Amazon.com Inc (AMZN.O) and several on Walmart’s (WMT.N) Flipkart, according to sources.
Indian retailers, who are staunch allies of Prime Minister Narendra Modi, have long claimed that Amazon and Flipkart’s platforms benefit a small number of large sellers through predatory pricing, despite the companies’ claims that they follow all Indian regulations.
Cloudtail and Appario were the two Amazon sellers targeted in Thursday’s raids, according to two sources who spoke on the condition of anonymity because the specifics were not made public.
Two other sources stated the Competition Commission of India (CCI) was raiding several vendors on Walmart’s Flipkart marketplace, although there were no immediate details.
“This is a significant development as generally CCI doesn’t do searches in non-cartel cases,” a former official of the competition regulator told Reuters.
The regulator is entering a new territory by conducting dawn searches to uncover complicated business activity.
Amazon, which has an indirect stock investment in both of the raided merchants, and Flipkart did not immediately reply to requests for comment. Cloudtail, Appario, and the regulator did not respond to emailed requests for comment.
According to one of the sources, the raids in the capital, New Delhi, and the southern IT powerhouse, Bengaluru, were related to a probe ordered by the CCI in January 2020.
In that lawsuit, Amazon and its competitor Flipkart have been accused of anti-competitive activities such as promoting preferred vendors on websites and prioritizing listings from certain sellers. The antitrust probe is still going on.
Amazon has previously stated that it “does not give any seller on its marketplace preferential treatment” and “treats all sellers in a fair, transparent, and nondiscriminatory manner.”
Last year, a Reuters investigation based on Amazon internal papers revealed that the company had granted a small group of vendors on its platform, including Cloudtail, special treatment for years and used them to circumvent Indian rules.
It revealed that Amazon has been assisting these vendors for years with cheaper fees and other benefits, as well as assisting Cloudtail in striking special partnerships with large tech corporations.
According to the analysis, about 35 of Amazon’s over 400,000 merchants in India accounted for roughly two-thirds of sales on the company’s Indian platform in 2019. Cloudtail and Appario, two of the platform’s top sellers, accounted for 35% of total revenues.
The antitrust agency told a judge that the Reuters report backed up the information it had received against Amazon.
Amazon and Cloudtail agreed in August that the latter would stop selling in May 2022.
