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Wednesday, November 13, 2024

Amazon, Flipkart under ED scrutiny, executives summoned for FDI law breaches

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After the Enforcement Directorate (ED) raided Amazon and Flipkart seller offices, the agency is reportedly planning to summon executives from both companies over suspected violations of foreign direct investment (FDI) laws.

ED calls on executives based on document seized from sellers

According to a Reuters report citing an anonymous government source, the ED plans to call in executives after examining documents seized from sellers during the raids. These raids were part of an investigation into potential Foreign Exchange Management Act (FEMA) violations in seller offices located in Delhi NCR, Mumbai, Bengaluru, Gurugram, and Hyderabad.

Continue Exploring: Amazon Seller Services reports 14.5% revenue increase to INR 25,406 Cr, reduces loss

Meanwhile, the report stated that these searches supported the agency’s investigation into FDI violations. Meanwhile, the ED is analysing business data from sellers and their transactions with ecommerce companies over the past five years or more. Regulators have recently focused on Flipkart and Amazon India regarding the relationships between the platform and the sellers on their marketplaces.

CCI finds Flipkart, Amazon guilty of violating competition laws

Previously in 2024, the Competition Commission of India (CCI) found Flipkart and Amazon guilty of breaking competition laws by favouring certain sellers. The antitrust watchdog ordered both companies to share their financial statements. After a four-year case, the CCI will decide the fine, which could be up to 10% of their global annual turnover or income.

Continue Exploring: Zomato and Swiggy deny alleged competition law violations by CCI

At the same time, the Confederation of All India Traders (CAIT) has criticised the CCI for not acting quickly enough on the investigations and violations by Amazon and Flipkart.

These changes are important due to the shifts in the ecommerce landscape over the past year, with quick commerce companies becoming more prominent and growing fast. Flipkart has introduced its own quick commerce service, while Amazon plans to launch its version later this year, according to reports.

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