Antitrust raids at Amazon sellers Cloudtail, Appario in Delhi, Bengaluru

The government on Thursday raided top Amazon sellers Cloudtail and Appario over alleged violation of competition laws, Reuters said citing sources with direct knowledge of the matter who spoke on condition of anonymity.

The raids are being conducted by the Competition Commission of India.

One source said the raids – in Delhi and Bengaluru – related to CCI’s 2020 investigation, in which, Amazon and rival’s Flipkart (owned by Walmart) face accusations of anti-competitive practices like promoting preferred sellers and prioritising listings by some others.

An extensive investigation last year by Reuters – based on Amazon documents – showed the retail behemoth had given preferential treatment for years to a few sellers, including Cloudtail, and used them to bypass Indian laws.

Amazon has said it ‘does not give preferential treatment to any seller…’ and treats all in ‘a fair, transparent, and non-discriminatory manner’.

Amazon, which has an indirect equity stake in both sellers, did not immediately comment, Reuters said. CCI officials have not responded either, Reuters added.

Last year Amazon said Cloudtail would cease to be a seller from May.

Cloudtail has been controversial, with brick-and-mortar retailers for years accusing Amazon of giving it preferential treatment that hurts smaller retailers.

It was formed after Amazon entered a venture with an entity formed by Infosys founder Narayana Murthy, which was then used to create Cloudtail.

The Reuters investigation found Amazon called Cloudtail an independent seller but internal company documents revealed it was deeply involved in expanding it and used it, among other sellers, to circumvent foreign investment laws.

The story had triggered calls for a ban and an investigation.

India is a key market for Amazon and it has committed $6.5 billion, but it is also one where it has faced regulatory challenges, including stricter laws for foreign e-commerce giants.