The norms also prohibit e-commerce platforms or their group companies from having equity ownership in firms that sell goods on their marketplace.
The proposed change in e-commerce regulations has not just made things tougher for Amazon’s online business in India but also threatened to halt the American firm’s plan to own 49 percent equity in More supermarkets. The Competition Commission of India (CCI) has reportedly sought details from Samara Capital on how the proposed deal will comply with the revised e-commerce norms.
The revised norms bar foreign e-commerce marketplace companies to own or control inventory sold on their marketplaces. They also prohibit e-commerce marketplaces or their group companies from having equity ownership in firms that sell goods on their marketplace platform.
If Amazon guarantees that More will not be a seller on its online marketplace, that could perhaps be enough to win CCI approval.
Amazon could also pin its hope on getting some leeway in engaging better with More as the new norms are silent on whether indirect equity participation by the owner of an e-commerce marketplace is permitted in a seller. Under the current deal structure, More supermarkets will be bought by Witzig Advisory Services, in which Samara will own 51 percent and Amazon will hold the rest.The norms further note that in case marketplace entities exercise control over the inventory of sellers, the same will be treated as an inventory model. However, there is no clarity on how “control over inventory” is to be determined.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.