March 09, 2022 / 20:06 IST
The Competition Commission of India (CCI) has approved the acquisition of Prione Business Services by Amazon Asia-Pacific Resources. Prione was the joint venture between Narayan Murthy-led Catamaran and Amazon. Its wholly owned subsidiary Cloudtail India has been one of Amazon's largest sellers in the country.
CCI announced the development
on a micro blogging site on March 9. Amazon had
disclosed its plans to acquire Prione in December. So far Amazon and Catamaran jointly owned Prione Business Services whose wholly owned subsidiary Cloudtail India repeatedly came under the scanner for alleged violation of Foreign Direct Investment (FDI) norms. On August 9 last year, Amazon and Catamaran had also announced their decision to not continue the joint venture beyond the end of its current term of May 2022. This decision came following the Supreme Court's decision which allowed the CCI to conduct an investigation into the alleged anti-competitive practices of Amazon. It wasn't immediately clear how Amazon is preparing to replace Countail's business on its platform as the e-commerce rules bar marketplaces from having any ownership in the firms run by their sellers.
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In India, e-tailers are known to be having a set of preferred vendors who get a majority of the business generated by these companies.
In 2018, the government had come up with Press Note 2, revising the then-existing Press Note 3. It asked the marketplaces to ensure that they will not sell the products of their group companies on their platforms.
Following the clarification, Amazon, which is also alleged to be getting a majority of its business from Cloudtail did a rejig in its structure in India.
In February 2019, Catamaran Ventures raised its stake in Prione Business Services. The move reduced Amazon Asia's stake in Cloudtail to 24 percent from the earlier 49 percent, with Catamaran Ventures’ stake rising to 76 percent from 51 percent earlier. Following this, Cloudtail ceased to be an Amazon group company, making it compliant with the rules on the papers, yet not serving the purpose with which the norms were straightened. However, even as the issue got ironed out on paper, the company kept facing constant criticism from offline traders.
Now this acquisition makes the waters even murkier with no clarity of how will the company manage to run Cloudtail by presumably having it under its umbrella.
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