By Aditya Kalra
NEW DELHI (Reuters) – An organization of more than 2,000 online merchants filed an antitrust lawsuit against Amazon in India, claiming that the U.S. company favors certain stores whose online discounts take independent merchants into bankruptcy, showed a legal case noted through Reuters.
The case presents a new regulatory challenge for Amazon in India, where it has committed $6.5 billion in investments and is still suffering in a regulatory environment.
In January, the Indian Competition Commission (ICC) ordered an investigation into Amazon and its Walmart-owned rival Flipkart into allegations of violations of festival law violations and safe aid practices, which Amazon denies, according to court documents.
In the latter case, the Association of Online Suppliers of all India, whose members sell products on Amazon and Flipkart, alleges that Amazon engages in unfair business practices. Reuters was the first to report the case on Wednesday.
The organization alleges that Amazon India’s wholesale arm buys bulk branded products and sells them at a loss from distributors such as Cloudtail. These distributors will then offer products in Amazon.in with giant discounts.
“This array anti-competitive array … ejects the festival by expelling independent distributors from the market,” the organization said at its August 10 presentation to CCI, noted through Reuters.
Amazon said in a statement that it complies with all the legislation and that its online page in India is a natural third-party marketplace where distributors have the discretion to make a decision on product prices. Amazon also says that its wholesale unit allows companies to purchase products and that anyone can sign up.
A Cloudtail spokeswoman said it “complies with all applicable legislation in its operations.”
Unlike Indian judicial bodies, submissions and the main points of the reviewed bodies through the ICC are not made public. In the coming weeks, the ICC will review the case and possibly open a broader investigation or record it.
The IAB responded to a request for comment.
Chanakya Basa, a lawyer for the group of vendors, showed the case submission to the ICC, but refused to give details.
Indians allow Amazon to function as an e-commerce marketplace where distributors can publish products for a fee.
India tightened regulations last year to deter large discounts, but small traders still say Amazon has complex business structures to circumvent restrictions, a claim the company denies.
The most recent archive, which lasts more than 700 pages, includes screenshots of product listings on Amazon that showed safe products, adding groceries and detergents, with 8% to 45% relief on visual retail costs in the e-commerceArray
The reseller organization also claims that Amazon charges a lower payment to determined distributors, making it difficult for independent online stores to compete on its website.
Cloudtail, one of Amazon’s largest Indian distributors, will pay Amazon a 6.3% electronics royalty, while independent distributors pay about 28.1%, the organization claimed if applicable.
Amazon says it is offering an e-commerce platform in India to more than 650,000 sellers.
(Report through Aditya Kalra in New Delhi; edited through Euan Rocha and Jane Merriman)
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