ED may summon Amazon, Flipkart executives as companies face heat in India
Amazon and Flipkart are facing increased pressure from regulators with the Enforcement Directorate (ED) planning to summon executives from both e-commerce giants for questioning into the alleged foreign direct investment (FDI) violations by them, a report by news agency Reuters has said.
The ED’s reported summon will follow raids conducted last week on several prominent sellers operating on Amazon and Flipkart platforms. The officials seized some documents during the raids, which concluded on Saturday, and they have substantiated the alleged FDI violations, the report added.
The agency is probing allegations that the companies, through these select sellers, exert undue control over inventory, potentially violating Indian laws that prohibit foreign e-commerce players from holding inventory of goods they sell directly.
The ED will also analyse business data from the sellers and their dealings with the e-commerce companies over the past five years, the official added.
As per the laws, foreign e-commerce players cannot hold inventory of goods they can sell on their website, which means that they can only operate a marketplace of sellers.
The raids were triggered by Amazon and Flipkart antitrust investigation findings that said the platforms “had end-to-end control over the inventory and the sellers are just name lending enterprises.”
What Amazon and Flipkart have said
Both Amazon and Flipkart have maintained that they comply with all Indian laws. However, the ED has been investigating these allegations for several years, the report added. There are no fresh comments from the e-commerce giants.
This investigation comes amidst growing concerns about the dominance of Amazon and Flipkart in the Indian e-commerce market. The two companies dominate India’s $70 billion e-commerce market.
A previous antitrust investigation by the Competition Commission of India (CCI) found that both companies had breached competition laws by favouring select sellers.
