Exclusive-Former Amazon India seller says antitrust raid illegally detained employees -Breaking
Aditya Kalra, Abhirup and Roy
NEW DELHI (Reuters] – Cloudtail in India was a top Amazon seller (NASDAQ:). According to court documents, Reuters has seen, Cloudtail accused India’s Antitrust Agency of illegally detaining employees during a raid regarding suspected violation of the Competition Law.
Cloudtail is one of the online sellers that were raided by Amazon (NYSE)’s Flipkart in an investigation over alleged preferential treatment.
“[Three] employees from the senior management were detained for over 30 hours through the night till the completion of the search & seizure operation,” the May 30 filing said. It was carried out on April 28, 29.
Cloudtail, Amazon and others did not respond.
Senior sources at the Competition Commission of India, which carried out the raid, denied all allegations. They claimed that they had the required legal approvals and were in compliance with Indian regulatory procedures. Source declined to comment to media.
Cloudtail’s filing is a sign of an increasing tussle among India’s assertive authorities with the foreign ecommerce players who, together with their affiliates dominate India’s booming internet retail sector.
Small traders, a constituency of Prime Minister Narendra Modi, have claimed for years that online sellers are favoured by foreign companies, in contravention to Indian law. These allegations were denied by companies.
This is not the first sector where Indian authorities are involved in recent legal battles with foreign businesses.
Chinese smartphone manufacturer Xiaomi (OTC) claimed in a filing, that top officials faced threats of violence and coercion as a result of an Investigation by India’s Enforcement Directorate into remittance payments. They denied all allegations.
Cloudtail was present at the Delhi High Court’s initial hearing. It did not discuss the detentions.
Cloudtail lawyers suggested to the judge that Cloudtail shouldn’t have been raided as it was just a third party seller on Amazon.
Manish Vashisht from CCI argued Cloudtail had only tried to deter authorities from conducting the investigation. This was despite the fact that the CCI watchdog is also investigating Amazon’s relationships with sellers.
The next hearing has been scheduled for July 15, according to the judge.
Cloudtail has ceased being a seller on Amazon since Amazon took control.
Cloudtail was under the control of a joint venture formed by Amazon and an Indian entity during CCI’s investigation.
Last August, the two companies made it clear that they were ending their partnership after a Reuters investigation based upon Amazon documents showed that Cloudtail and a select group of sellers had been given preferential treatment over years. These practices allowed them to circumvent Indian laws. (https://reut.rs/3QcQyYr)
While Amazon referred to Cloudtail publicly as an independent seller of goods, documents from the company revealed that it was heavily involved in its expansion. Amazon claims it doesn’t give any seller preferential treatment and that it strictly complies with law.
Cloudtail objected in court to CCI raids that seized confidential documents, including photos of family members and test results. However, its lawyers were not permitted to enter or help employees during raids.