There is a new Amazon antitrust case in India which is as a result of some 2,000 online sellers alleging that the big eCommerce brand is favoring some retailers whose online discounts drive independent vendors out of business.
The case presents a new regulatory challenge for the company in India where it has already invested some US$6.5 billion in investment but battling a complex regulatory situation within the southern Asian country.
Back in January of the year, the CCI or Competition Commission of India did order an investigation on Amazon and it’s rival FlipKart which is also owned by an American brand, Walmart over allegations of violating competition law and certain discounting practices which Amazon is challenging based on court filings.
The All India Online Vendors Association, whose members also sell products on both Amazon and Flipkart allege that Amazon engages in some unfair business practices that is hurting their sales and ruining their business overall.
In their allegation against the giant American eCommerce store, the group made it known that the Amazon India’s wholesale arm buys goods in bulk from manufacturers and sell them at a loss to sellers such as Cloudtail. The sellers at this point then offer goods on the platform at massive discounts.
“This anti-competitive arrangement … is causing foreclosure of competition by driving independent sellers out of the market,” the group alleged in its Aug. 10 filing at CCI, seen by Reuters.
Amazon did not respond to a request for comment even though it was reported that the company said it did comply with all the Indian laws and treats all sellers equally on its platform.
A Cloudtail spokeswoman said it was in “compliance with all applicable laws in its operations.”
The filings and details of cases reviewed by the CCI were not made public unlike the Indian court cases but the CCI will further review the case in coming weeks in order to decide whether to launch a wider investigation on the company or not.
The CCI did not also respond to a request for comment.
Meanwhile a lawyer for the sellers group, Chanakya Basa did confirmed that the case filing with the CCI even though didn’t go any further with it. But India’s regulatory law gave Amazon the permission to operate it’s eCommerce marketplace allowing sellers to list their goods for a fee.
Small sellers in the country did claim that Amazon uses complex business structures to bypass restrictions despite Indian government’s tightened regulations which were put in place last year 2019.
The current case has more than 700 pages which also includes several screenshots of product listings on Amazon’s website which showed some products including groceries and detergents discounted between 8% and 45% compared to retail prices visible on the eCommerce website.
The seller group also alleges that Amazon charges lower fees to selected sellers, which effectively makes it difficult for independent online retailers to compete on its website.
Cloudtail, one of Amazon’s biggest India sellers, pays a fee to Amazon of 6.3% for electronic products, while independent sellers pay roughly 28.1%, the group alleged in its filing.
Meanwhile Amazon has continued to stand its ground stating that it only created it’s platform to allow sellers numbering up to 650,000 in the country to list their products and make their own pricing decisions.