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Amazon’s indirect acquisition of Aditya Birla group-owned More supermarket chain has irked the traders, again. According to traders, it is a violation of the revised FDI policy and will affect the small and medium traders.
The Competition Commission of India (CCI) on Thursday approved the Amazon-Samara Capital joint bid to acquire Aditya Birla Retail Ltd that owns More. This was done through Samara Capital-owned Witzig Advisory Services, where Amazon now has a 49 per cent stake.
The total amount of the deal was ₹4,200 crore.
The deal has come at a time when there is a strong sentiment against foreign investments in retail. The furore over Walmart’s acquisition of Flipkart early last year is yet to die down. The case is currently under notice for admission with the National Company Law Appellate Tribunal.
In addition, the government recently came out with the revised FDI in e-commerce policy. The revised norms state that the e-commerce players cannot sell products from companies they have stake in. Also, e-commerce companies with foreign funds have to compulsorily operate as a marketplace and not an inventory model. For instance, Amazon holds stakes in Cloudtail India and Appario Retail and will not be able to sell their wares.
Praveen Khandelwal, Secretary General, Confederation of All India Traders (CAIT), said in a statement on Monday, “It is nothing but a clear case of circumventing the FDI Policy in e-commerce and paving the way for others to follow. In other words it’s a mockery of the Policy in day light.”
While the CCI has approved the combination based on the “competition aspect” of the deal, going by the recent policy it should be deemed illegal, he added.
“There is an urgent need to look in to the issue and the CAIT has urged the Commerce Minister Suresh Prabhu to take immediate cognisance of this critical issue and order a probe in the matter and till then the takeover should be stayed,” he added.
The revised FDI in e-commerce policy comes into effect from February 1. Major online retailers had approached the government seeking extension in the implementation of FDI norms. The CAIT had earlier said that it will launch a nation-wide agitation if the government accedes to e-commerce players’ demand to change or delay the implementation of revised FDI norms for e-commerce.
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