Amazon and Cloudtail, Appario related as preferred sellers: CCI lawyer

Big e-commerce firms selling their own private labelled brands and inventory at discounts, High Court told

A lawyer for the Competition Commission of India (CCI) on Thursday told the Karnataka High Court that Amazon and Appario and Cloudtail are related, arguing that the e-commerce giant gives the "preferred sellers" priority and pushes down others in search results.

Cloudtail, one of the largest sellers on Amazon India, is owned by Prione Business Services, a joint venture between the e-commerce company and Infosys co-founder N R Narayana Murthy’s Catamaran Ventures. Appario Retail is a subsidiary of Frontizo, which is a joint venture between Amazon and the Patni Group.

The High Court is hearing two petitions by Amazon and Flipkart to quash a probe ordered by the CCI for alleged violations of competition laws. Madhavi Divan, additional solicitor general, told the court about allegations of predatory pricing, deep discounts and favouring preferred sellers against Amazon and Flipkart.

She alleged firms were selling their own private labelled brands and inventory at discounts, according to law platform Bar & Bench.

“Non preferred sellers are pushed down in search results as preferred sellers are given a priority (such as Appario and Cloudtail),” said Divan, according to Bar & Bench.

Divan, who appeared for CCI, said an important aspect that should be looked into is whether there is any manipulation of the algorithm to favour Appario or Cloudtail.

Divan contended that e-commerce firms have several exclusive tie-ups with smartphone brands. She argued that such exclusivity eliminates competitors and this violates the Competition Act.

She said discounting practices have an impact on the offline market also. She informed the court that there are high entry barriers in the online market as Flipkart and Amazon hold 80 per cent space.

During Flipkart’s Big Billion Days Sale and Amazon’s Great Indian Festival, large discounts are offered.

Divan alleged that USA’s Walmart, the parent company of Flipkart, had abused its dominant position in Germany, Australia and other places. The size of Amazon and Flipkart would affect micro, small and medium enterprises (MSMEs) in India.

The court adjourned the matter till March 19.