Amazon faces new antitrust challenge from Indian online sellers

A group of more than 2,000 online sellers has filed an antitrust case against Amazon in India, alleging the US company favors some retailers whose online discounts drive independent vendors out of business, a legal filing saw by Reuters showed.

The case presents a new regulatory challenge for Amazon in India, where it has committed $6.5 billion in investment but is battling a complex regulatory environment.

In January, the Competition Commission of India (CCI) had ordered an investigation of Amazon and rival Flipkart, owned by Walmart, over alleged violations of competition law and certain discounting practices, which Amazon is challenging, according to court filings.

In the latest case, the All India Online Vendors Association, members of which sell goods on Amazon and Flipkart, allege Amazon engages in unfair business practices. Reuters was first to report the case filing on Wednesday.

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The group alleges that Amazon India’s wholesale arm buys goods in bulk from manufacturers and sells them at a loss to sellers such as Cloudtail. Such sellers then offer goods on Amazon.in at big discounts.

“This anti-competitive arrangement ... is causing foreclosure of competition by driving independent sellers out of the market,” the group alleged in its August 10 filing at CCI, seen by Reuters.

Amazon said in a statement it complies with all laws and its India website is a pure third-party marketplace where sellers have discretion to decide product prices. Amazon’s statement also said its wholesale unit allows businesses to buy products and anyone can register on it.

A Cloudtail spokeswoman said it was in “compliance with all applicable laws in its operations.”

Unlike Indian court cases, filings and details of cases reviewed by the CCI are not made public. In the coming weeks, the CCI will review the case and could decide to launch a wider investigation or dismiss it.

The CCI did not respond to a request for comment.

Chanakya Basa, a lawyer for the seller's group, confirmed the case filing with the CCI but declined to elaborate.

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India’s regulations allow Amazon to operate an e-commerce marketplace where sellers can list goods for a fee.

India tightened regulations last year to deter steep discounts, but small sellers still say Amazon uses complex business structures to bypass restrictions, an allegation the company denies.

The latest case filing, running to more than 700 pages, includes screenshots of product listings on Amazon’s website that showed some products, including groceries and detergents, discounted by between 8% to 45% compared with retail prices visible on the e-commerce 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.

Amazon says it provides an e-commerce platform in India to more than 650,000 sellers.