Traders’ body Confederation of All India Traders (CAIT) on Friday filed a petition before the Competition Commission of India (CCI) seeking to block the proposed combination of acquisition of Prione Business Services by Amazon.

This combination raises serious concerns from the viewpoint of competition law. It would lead to Amazon gaining 100 per cent control on Cloudtail, a 100 per cent subsidiary of Prione and is presently the largest seller on Amazon’s e-commerce platform. The CAIT has submitted that if the proposed combination is allowed, Cloudtail will be under the complete control of Amazon. There is a high likelihood that it will receivefurther benefits of reduced or zero commissions thereby getting a further advantage over other sellers on the Amazon platform, CAIT petition submitted.

CAIT said that the petition has been filed through its lawyer Abir Roy of law firm Sarvada Legal, providing instances wherein Amazon gives preference to Cloudtail and such preference will only become more pronounced after this transaction, which would destabilise the e-commerce market of India.

Fewer fees/commissions

The petition provides evidence to show Cloudtail charges fewer fees/commissions and is a preferential seller on the platform, and with a 100 per cent acquisition of Cloudtail, a preferred seller and the marketplace at its e-commerce portal, Amazon harm the market. 

A marketplace like Amazon, which is supposed to be fair and neutral and as per rules have to be purely a technology providing forum for conducting e-commerce activities by the sellers who are registered with its portal, continues to “unabashedly distort the entire ecosystem”, CAIT has said. This transaction is not only in violation of competition law but is a violation of FDI norms too, it added. Amazon has proposed to completely acquire Prione by acquiring all the shares held by Hober Mallow Trust. Presently, Prione is controlled by Hober Mallow. Seventy-Six per cent (76 per cent) of the share capital of Prione is held by Hober Mallow.

Amazon Asia-Pacific Resources Pvt Ltd already owns 23 per cent of the share capital of Prione and Amazon Eurasia Holdings S.a.r.l. owns 1 per cent of the share capital of Prione. Therefore, Amazon holds a 24 per cent stake in Prione as of today.

However, by acquiring the shares of Hober Mallow, Amazon and its affiliated entities would have a 100 per cent stake in Prione. Cloudtail India Pvt Ltd (“Cloudtail”) is a 100 per cent subsidiary of Prione and is also presently the largest seller on Amazon’s e-commerce platform. Therefore, the proposed combination raises some concerns from the viewpoint of competition law, the CAIT said. 

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