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Traders' body moves Competition Commission against Amazon-Cloudtail deal
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SME Times News Bureau | 14 Jan, 2022
The Confederation of All Indian Traders (CAIT) has moved the Competition
Commission of India (CCI), seeking a direction to block the acquisition
of Cloudtail India by Amazon.
Cloudtail is a 100 per cent
subsidiary of Prione Business Services, a joint venture of Amazon and
Catamaran Ventures and is also presently the largest seller on Amazon's
e-commerce platform, Amazon.in.
Citing the proposed structure of
stake in Cloudtail, the plea said: "Amazon would have 100 per cent stake
in Cloudtail, post the proposed combination. It is submitted that if
the proposed combination is allowed, then it would cause an appreciable
adverse effect on competition." CAIT argued that complete control of
Amazon will result in Cloudtail getting further preference on its
platform.
In a statement, CAIT, providing instances wherein
Amazon gives preference to Cloudtail, said such preference will only
become more pronounced after this transaction, which would have a
destabilising effect on the e-commerce market in India.
The
traders' body petition said: "Another evidence showing that Amazon has
given preference to Cloudtail on its platform is the fact that
Cloudtail's revenue has increased significantly over the years. In FY
2021 only, Cloudtail's revenue increased by 46 per cent to INR 16,639
crore."
The plea argued that Cloudtail gets preference on the
platform of Amazon, and with the proposed combination, it would become a
wholly-owned subsidiary of Amazon, and gain further advantages such as
access to immense financial resources and data, in addition to better
listing on the platform.
In a statement, CAIT said: "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." It alleged that this transaction is
not only in violation of competition law but is also a violation of FDI
norms too.
The traders' body argued that Amazon has emerged as a
gatekeeper and an essential trading partner of retailers to reach out to
the consumers, especially in Covid period and even post Covid
situation, consumer behaviour is likely to change significantly and
shift towards e-commerce only.
"Therefore, it is crucial that
Amazon as a marketplace remains neutral and fair. This Hon'ble
Commission has itself stated that rules of engagement for the platforms
become important and it has to be ensured that the relationship is not
exploited by the platforms. Therefore, Amazon cannot be allowed to have a
special relation with a few of its sellers, to the disadvantage of
other smaller sellers," added the plea.
A CAIT statement said
Amazon has proposed to completely acquire Prione by acquiring all the
shares held by Hober Mallow Trust. "Presently, Prione is controlled by
Hober Mallow. Seventy Six percent (76 per cent) of the share capital of
Prione is held by Hober Mallow. Amazon Asia-Pacific Resources Pvt Ltd
already owns 23 per cent of the share capital of Prione, and Amazon
Eurasia Holdings S.a.r.l. owns 1 per cent of the share capital of
Prione. Therefore, Amazon holds 24 per cent stake in Prione as of today.
However, by acquiring the shares of Hober Mallow,Amazon and its
affiliated entities would have 100 per cent stake in Prione," it added.
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