CAIT files petition to block Amazon's bid to buy 100 pc stake in Cloudtail

The traders' grouping said that it has in its petition provided instances of Amazon giving preference to Cloudtail and noted that such preference will only become more pronounced after this transaction.

It has claimed that the proposed deal once through would have a destabilizing effect on the e-commerce market of India.

"The petition provides evidence to show Cloudtail charges less fees/commission and is a preferential seller on the platform, and with a 100 per cent acquisition of Cloudtail, a preferred seller and the marketplace at its e-commerce portal, Amazon will cause an adverse effect on the market," CAIT said.

"A marketplace like Amazon, which is supposed to be fair and neutral and as per rules have to be purely a technology providing forum for conducting e-commerce activities by the sellers who are registered with its portal, continues to unabashedly distort the entire ecosystem. This transaction is not only in violation of competition law but is also a violation of FDI norms too," the traders' body further said.

On December 23, Amazon made a filing with CCI for regulatory approval to acquire acquire Catamaran Venture’s entire stake in Prione Business Services, which owns Cloudtail.

Background

Prione Business Services, the joint venture between Narayan Murthy-led Catamaran and Amazon, will be acquired by Amazon.

Cloudtail India is Prione's wholly-owned subsidiary and is one of Amazon's largest sellers in the country.

"Amazon will acquire Catamaran’s shareholding in Prione in compliance with applicable laws including all assets and liabilities," the two companies said in a joint statement on December 22.

"The businesses of the joint venture shall continue under the leadership of the current management and on receipt of regulatory approvals, the board of Prione and Cloudtail will take steps to complete the transaction in compliance with applicable laws," the statement added.

Cloudtail India is a wholly-owned subsidiary of Prione Business Services, owned by Amazon and Catamaran.

Cloudtail India has repeatedly come under the radar for alleged violation of Foreign Direct Investment (FDI) norms.

On August 9 this year, Amazon and Catamaran announced their decision to not continue the joint venture after May 2022 when its current term also ends.

This decision came after the Supreme Court's order allowing the Competition Commission of India (CCI) to start a probe into the alleged anti-competitive practices of Amazon.

Cloudtail will continue as a seller on Amazon for now, but it wasn't immediately clear if it could continue to sell products on Amazon as after this acquisition it will fall under the e-commerce rules that prohibit marketplaces from possessing any ownership in the firms run by their sellers.

In India, e-tailers are known to be having a set of preferred vendors who get a majority of the business generated by these companies.

In 2018, the government had come up with Press Note 2, revising the then-existing Press Note 3. It asked the marketplaces to ensure that they will not sell the products of their group companies on their platforms.

Multiple legal battles

Amazon is locked in tussle with Future Retail over the latter's deal with Reliance Retail claiming that the deal was a violation of pacts it had signed with Future.

Last month, CCI had suspended the Amazon-FCPL deal saying that American e-tailer had suppressed information while seeking the nod for the same.