23 December , 2021 Fdiindia
Amazon India Looking to Buy Largest Amazon Seller Cloudtail
E-commerce giant Amazon India has announced that it has proposed to take complete control of Cloudtail, the largest seller on Amazon. The announcement came a few months after it had decided to end the joint venture.
Amazon has approached the Competition Commission of India (CCI) to acquire the stake in Prione Business Services (which operates Cloudtail) held by Catamaran Ventures, which is owned by Narayan Murthy.
If the CCI approves the acquisition, Cloudtail will no longer be able to continue as a seller on the marketplace under India’s current regulations. India prohibits foreign direct investment (FDI) in inventory-based models for e-commerce and allows companies such as Amazon and Flipkart to only function as a marketplace for other businesses.
As per the Press Note 2 issued by the Department of Industrial Policy and Promotion in December 2018, marketplaces cannot participate in seller activities through any group entities.
In order to comply with this regulation, Catamaran Ventures raised its stake in Prione to 76% from the previous stake of 51%. Amazon reduced its shareholding from 49% to 24%.
“Prione Business Services Pvt. Ltd., the joint venture between Catamaran and Amazon, will be acquired by Amazon subject to requisite regulatory approvals. On August 9, the partners had announced their decision not to continue the JV beyond the end of its current term of May 2022,” said Amazon India and Catamaran in a joint statement.
“Amazon will buy Catamaran’s shareholding in Prione in compliance with applicable laws, including all assets and liabilities. The businesses of the joint venture shall continue under the leadership of the current management. On receipt of regulatory approvals, the board of Prione and Cloudtail will take steps to complete the transaction in compliance with applicable laws,” the statement added.
The announcement comes at a time when India is looking to formulate stricter regulations for the e-commerce industry after trader associations complained about alleged malpractices by these firms to thwart fair competition.