ICC to restart probe into Amazon's joint venture with Murthy family
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New Delhi: Amazon's £1bn-a-year joint venture with the Murthy family in India is under investigation by the Indian competition commission. The online giant's selling practices are also to be probed.
The investigation into the joint venture with UK chancellor Rishi Sunak's billionaire in-laws, the Murthy family was originally announced in January 2020. The investigation was put on hold after the US companies denied breaking any laws.
The probe is based on the complaints by a group of traders that small sellers are being pushed out of business because Amazon is giving preferential treatment to 'preferred sellers'. One of the 'preferred sellers' on the site is Cloudtail, a company with 76% controlling shares owned by the Murthy family. The remaining 24% of shares are owned by Amazon itself.
The original investigation was against four practices - exclusive launches of mobile phones on the website, promoting preferred sellers, deep discounts, and giving advantage to some sellers over others.
The High Court of Karnataka dismissed the pleas by Amazon and Flipkart to quash the investigation. Flipkart is owned by American firm Walmart. Justice PS Dinesh Kumar refused the US firm any more relief. Amazon is likely to appeal against the High Court verdict.
India's foreign direct investment law prohibits overseas companies from running an online retailer (like Amazon and Flipkart) that holds inventory. The law also bans the sale of these goods to Indian consumers online.
US companies like Amazon are working as a marketplace in India. They facilitate a platform for Indian sellers to showcase their products on the website for a fee. Small traders are alleging that they are at a disadvantage because the company is favouring big sellers like Cloudtail.