An antitrust lawsuit against e-commerce giant Amazon has been filed by a group of more than 2,000 online sellers in India.
The complaint claims that the US firm favors certain retailers whose online discounts are forcing independent vendors out of business.
The case poses a new regulatory challenge for Amazon in India, where it has invested $6.5 billion in investment but is facing a complex regulatory climate.
In January, the Competition Commission of India (CCI) had ordered an investigation of Amazon and rival Flipkart, owned by Walmart, over suspected violations of competition law and other discounting practices. According to court filings, Amazon is appealing the case.
CCI is a legislative body of the Indian government responsible for preventing acts that have a direct and adverse impact on competitiveness in India’s market.
The All India Online Vendors Group, whose representatives sell goods on Amazon and Flipkart, charges in the latest case that Amazon is engaged in unfair business practices.
The group alleges that the wholesale arm of Amazon India purchases goods from manufacturers in bulk and sells them to sellers like Cloudtail at a loss. These vendors then offer products at major discounts on Amazon.in.
Cloudtail is indirectly owned by Amazon India. Further, according to last year’s numbers, Cloudtail sources and fulfills more than 25 per cent of all orders on Amazon India.
“This anti-competitive arrangement is causing foreclosure of competition by driving independent sellers out of the market,” the group alleged in its filing at CCI.
The seller community also alleges that Amazon charges selected vendors with lower fees, which in effect makes it impossible for independent online retailers to compete on the website.
Cloudtail is paying Amazon a 6.3 percent fee for electronic goods, while independent sellers are paying around 28.1 percent, the group claimed in its filing.
Amazon responded that it complies with all laws and its India website is a pure third-party marketplace where sellers have the freedom to determine the prices of the products. Amazon’s statement also said that its wholesale service allows businesses to purchase products and that everyone can register on it.
India’s regulations make it possible for Amazon to run an e-commerce platform where sellers can list goods at a charge.
The new case filing, which runs to more than 700 pages, contains screenshots of product listings on Amazon’s website that showed certain products, including food items and detergents, discounted between 8 percent and 45 percent compared to retail prices available on the e-commerce website.
Filings and details of cases investigated by the CCI are not made public, as opposed to Indian court proceedings. The CCI will review the case in the coming weeks, and may decide to initiate or dismiss a broader investigation.
India tightened regulations last year to discourage steep discounts but small sellers still complain that Amazon uses complicated business mechanisms to avoid restrictions, a claim rejected by the company.