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Amazon and the parent company of its Indian best seller Cloudtail have decided not to continue their joint venture after May 2022, the two companies said in a statement on Monday, hours after India’s highest court ruled that the US trading company Walmart’s electronics and Flipkart faced antitrust investigations. in the South Asian market.
The catamaran of billionaire NR Narayana Murthy, the parent company of Cloudtail, and Amazon launched the joint venture in the country in 2014. The joint venture restructured its ownership in 2019 following India’s regulatory changes – more on that soon.
The move follows the Indian Supreme Court ruling earlier today that Amazon and Flipkart face ordered antitrust investigations against them in the country.
India’s watchdog – the Competition Commission of India – last year ordered an investigation of companies for allegedly promoting selected sellers (those in which they have a stake) on their e-commerce platforms and used business practices that stifle competition.
In a statement released on Monday, the two companies said Cloudtail – registered as Prione Business Services – has enabled more than 300,000 sellers and entrepreneurs to connect online and provided 4 million merchants with payment capabilities. digital. The joint venture, they said, has helped traders and small businesses gain access to millions of customers in India.
Cloudtail is one of the biggest sellers on Amazon in India. The e-commerce group has stakes in a few other third-party vendors, including Appario Retail, which is its joint venture with Patni Group.
“As our joint venture with Amazon reaches the end of its tenure, I reflect on this successful partnership that has introduced the power of digitization and enabled hundreds of thousands of SMEs in cities large and small,” said MD Ranganath , president of Catamaran, in a press release. .
The two companies did not say why they had decided to end their joint venture.
Long-standing laws in India have prevented Amazon and other e-commerce companies from holding inventory or selling items directly to consumers. To get around this, the companies have operated through a maze of joint ventures with local businesses that operate as storage companies.
India succeeded in closing this loophole in late 2018 in a move that was widely seen as the biggest backlash for American business in the country at the time. Flipkart, owned by Amazon and Walmart, rushed to remove hundreds of thousands of items from their stores and made their investments in affiliate businesses much more indirect.
In June of this year, India proposed even stricter e-commerce rules which, among other things, prohibit Amazon, Flipkart and other e-commerce players from exploiting their internal / private brands. The new proposal asks e-commerce companies to ensure that none of their related and associated parties are listed on their platforms as a seller to sell directly to customers.
“Amazon and Catamaran formed an early e-commerce joint venture in India with a shared vision to transform hundreds of thousands of small businesses in a rapidly changing digital world, by providing online capabilities to access customers. both in India and globally, ”said Amit Agarwal, global senior vice president and country head of Amazon India, in a statement.
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