The Confederation of All India Traders has filed a petition before the Competition Commission of India seeking inhibition of the transfer of Catamaran Ventures’ stake in Prione Business Service Private Limited, the parent company of Cloudtail, to Amazon. Cloudtail is the biggest seller on Amazon India.
Citing the de-stabilising effects on e-commerce in India if the ownership is transferred, CAIT says that if the transaction involving the acquisition of 100 percent shareholding in Cloudtail by Amazon culminates successfully, then the preference that Amazon gives to its retailers on its e-commerce platform will only increase. CAIT says that such a scenario will violate the norms made for the Foreign Direct Investment (FDI) in the e-commerce sector in India.
In 2014, Catamaran Ventures, headed by Infosys honcho, N.R. Narayan Murthy, and Amazon entered into a joint-venture agreement and set up Prione Business Service, a company that housed Cloudtail. At the time of the deal, Amazon had a 49 percent stake, while Catamaran Ventures had a 51 percent stake.
After a few tweaks in the policies designed for FDI, the government of India obstructed foreign entities from owning stakes in seller firms. As a result, firms such as Amazon and Flipkart were only allowed to function as marketplaces for other businesses and sellers. This hindered their influence in the seller groups.
Aligning themselves with the newly reformed laws, Catamaran Ventures raised their stakes in the company to 76 percent, plummeting Amazon’s shareholding to only 24 percent. In August 2021, the two stakeholders announced the termination of the joint-venture agreement on May 2022, post which the shareholding will be completely transferred to Amazon.
The petition filed by CAIT aims at blocking this transfer of ownership. The trader’s body says that Amazon, with such acquisitions, is distorting the ecosystem of commerce prevalent in the country. CAIT, along with the petition, has also provided evidence to show how Amazon prefers Cloudtail as a seller on the platform, behaving against the “fair and neutral platform” that it is supposed to be. CAIT argues that Amazon should simply be a technology-providing forum for conducting e-commerce activities.
CAIT stated that the preference that Cloudtail gets on the e-commerce platform will only proliferate after this transaction is completed. While Amazon is working towards acquiring Cloudtail, the largest seller on Amazon, the US-based e-commerce giant also started another joint venture named Appario Retail in collaboration with Patni Group.
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