'Appears that Amazon affiliate is selling on the marketplace', CCI argues in case against Amazon, Flipkart

Updated : March 18, 2021 08:11 PM IST

The CCI counsel said that the informant had shown material indicating Appario appeared higher on search results for certain phones

The Competition Commission of India (CCI), which is fighting a stay on its probe ordered against Amazon and Flipkart over anti-competitive practices, argued in the Karnataka High Court on March 18 that the material brought to them by the informant shows there could be an affiliate of Amazon selling on its marketplace.

Additional Solicitor General Madhavi Divan, appearing for CCI, cited from the material that was shared by the informant in the case -- the Delhi Vyapar Mahasangh -- on the basis of which the anti-trust watchdog had called for the Director-General to initiative a probe.

"It appears that an affiliate of Amazon is selling on the platform," Divan said. She cited the material to say that Appario (a seller on Amazon India's marketplace) appears to have a common connection (director, address, signatory) with Frontizo (holding company of Appario) and added that Frontizo has a common director with an Amazon company - Amazon Retail India.

"There appears to be a link. We do not know what the link is but there appears to be a link," Divan added. "The question is whether Appario is a preferred seller. It maybe that there is no common equity, but there is a connection," she stressed.

The CCI counsel added that the informant had shown material indicating Appario appeared higher on search results for certain phones. Among the allegations against the e-commerce companies include preferential treatment to sellers.

"A question to be probed is on whether there is any manipulation of algorithm by Amazon to favour Appario," Divan said.

The new draft of the upcoming e-commerce policy stresses on companies ensuring no algorithm bias against any sellers.

Interestingly, Amazon had told the Karnataka High Court on January 21, that there is a common director at Amazon Retail India, a food retail entity of the global e-commerce giant, and Frontizo.

Amazon's counsel Gopal Subramanium had said that Sameer Khetapal is a common director between the two entities. But argued that it is Amazon Seller Services which runs the Indian e-commerce platform and it does not have any common directors working at Cloudtail and Appario. He went on to call the connection a 'non-application of mind' by CCI.

"There is one director common to Frontizo and Amazon Retail India Pvt Ltd. But Amazon Retail India is not the entity in question, it is not the marketplace entity," Subramanium said. "The entity which is the subject matter of investigation under Sec 26 (1) of Competition Act is Amazon Seller Services India Pvt Ltd. This shows non-application of mind by the CCI."

Amazon's arguments were made against allegations by Delhi Vyapar Mahasangh that the company has preferred sellers in Cloudtail and Appario and controls the two entities through common directors.

In January 2020, CCI had said that there was a prima facie anti-trust case against Amazon and Flipkart based on the complaint and asked the Director-General to initiate a probe against the two companies.

A March 2019 filing from Tofler showed that Amazon Retail India is a 100 percent owned subsidiary of Amazon, with a 99 percent stake held by Amazon Corporate Holdings and rest 1 percent held by Amazon.com Inc.

An Amazon group company holds 24 percent stake in Frontizo, while the rest is held by the Patni Group, Subramanium said. Amazon holds a similar stake in Prione Business, the holding company of Cloudtail, while the rest is held by Narayana Murthy's Catamaran Ventures, he added.

Published : March 18, 2021 08:09 PM IST

'Appears that Amazon affiliate is selling on the marketplace', CCI argues in case against Amazon, Flipkart

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