ED raids premises of sellers using Amazon, Flipkart platforms
The searches are being conducted in connection with the Enforcement Directorate (ED)’s probe into allegations of violation of foreign investment rules.
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The Enforcement Directorate (ED) has raided 19 premises of selected sellers operating on Amazon and Walmart-owned Flipkart for alleged violations of foreign investment norms and the Prevention of Money Laundering Act (PMLA).
The searches reportedly were conducted in Delhi, Bengaluru, Mumbai, Hyderabad and Panchkula.
The sellers allegedly have violated FDI rules by directly or indirectly influencing the sale price of goods or services and not providing a level-playing field for all vendors
The searches come after the anti-trust body, Competition Commission of India (CCI) recently said both the platforms have engaged in anti-competitive practices by favouring select sellers on their platforms.
CCI started investigating the two first in 2019 when an affiliate of the Confederation of All India Traders (CAIT) petitioned against Amazon and Flipkart, saying the platforms favour some sellers.
Reports have claimed that ED inspected the premises and also took some copies of certain documents. Storybaord18 couldn't independently verify the same while filing the report.
On the raids, CAIT Secretary General and BJP MP from Delhi Praveen Khandelwal said, "CAIT, along with several other trade bodies, has been raising these issues for the past few years. I welcome the ED action as a step in the right direction.”
In September, CCI also sought financials from Amazon, Flipkart to decide penalty over anti-trust case.
In 2020, the CCI ordered an investigation into Amazon and Flipkart for allegedly promoting certain sellers with which they had business arrangements and giving priority to certain listings. In a 1027-page report on Amazon and a separate 1,696-page report on Flipkart- both dated August 9, the CCI investigators said the companies were found to have created an ecosystem where preferred sellers appeared higher in search results, elbowing out other sellers.
The anti-trust investigations also found that both the e-commerce giants have violated local competition laws by providing steeply discounting products, hurting other companies. Further, it was alleged that both platforms had used their foreign investments to provide such subsidised rates.
The penalty in the anti-trust case has been running for four years and will depend on the outcome of the regulatory hearing. The CCI can impose a charge of as much as 10% of global turnover which includes revenue earned by the entity in India and abroad.
