A group of more than 2,000 online sellers has filed an antitrust case against Amazon India, alleging the U.S. company favours some retailers whose online discounts drive independent vendors out of business, Reuters reported.
Amazon earlier committed $6.5 billion in investment in India to enhance its presence in the online retail business.
Amazon is already facing significant challenges in India due to regulatory regime.
In January, the Competition Commission of India (CCI) ordered an investigation of Amazon and rival Flipkart, owned by Walmart, over alleged violations of competition law and certain discounting practices.
All India Online Vendors Association allege Amazon engages in unfair business practices, saying Amazon India’s wholesale arm buys goods in bulk from manufacturers and sells them at a loss to sellers such as Cloudtail. Such sellers then offer goods on Amazon.in at big discounts.
“This anti-competitive arrangement is causing foreclosure of competition by driving independent sellers out of the e-commerce market,” the group alleged in its Aug. 10 filing at CCI.
Amazon India previously said it complies with all Indian laws and treats all sellers equally on its platform.
A Cloudtail spokeswoman said it was in “compliance with all applicable laws in its operations.”
In the coming weeks, the CCI will review the case and could decide to launch a wider investigation or dismiss it.
Chanakya Basa, a lawyer for the sellers group, confirmed the case filing with the CCI.
India’s regulations allow Amazon to operate an e-commerce marketplace where sellers can list goods for a fee.
India tightened regulations last year to deter steep discounts, but small sellers say Amazon uses complex business structures to bypass restrictions.
The latest case filing, running to more than 700 pages, includes screenshots of product listings on Amazon’s website that showed some products, including groceries and detergents, discounted by between 8 percent to 45 percent compared with retail prices visible on the e-commerce website.
The seller group alleges that Amazon charges lower fees to selected sellers, which effectively makes it difficult for independent online retailers to compete on its website.
Cloudtail, one of Amazon’s biggest India sellers, pays a fee to Amazon of 6.3 percent for electronic products, while independent sellers pay roughly 28.1 percent, the group alleged in its filing.
Amazon has said it helps to provide an e-commerce platform in India to more than 650,000 sellers who make their own pricing decisions while listing goods.