Amazon and the parent company of its top Indian 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 American e-commerce company and Walmarts Flipkart must be subject to antitrust investigations.
Billionaire NR Narayana Murthy’s Catamaran, the parent company of Cloudtail, and Amazon founded the joint venture in the country in 2014. The joint venture restructured its ownership in 2019 according to the new Indian regulations for e-commerce companies.
The development follows the ruling by the Supreme Court of India that Amazon and Flipkart must face antitrust investigations that have been ordered against them in the country. The Indian regulator – the Competition Commission of India – ordered an investigation into the companies last year for allegedly promoting select sellers (those in which they are involved) on their e-commerce platforms and using business practices that stifle competition .
In a statement Monday, the two companies said that Cloudtail – registered as Prione Business Services – enabled over 300,000 sellers and entrepreneurs to go online and provide digital payment options to 4 million merchants. The joint venture helped distributors and small businesses reach millions of customers in India.
“As our joint venture with Amazon approaches the end of its term, I am pondering this successful partnership that introduced the power of digitization and empowered hundreds of thousands of SMEs in cities and towns,” said MD Ranganath, President of Catamaran, in a Explanation .
Longstanding laws in India have prevented Amazon, which has not yet made a profit in the country, and other e-commerce companies from holding inventory or selling items directly to consumers. To get around this, companies have operated a maze of joint ventures with local companies that act as inventory holders.
India managed to fix this loophole in late 2018, widely considered to be the biggest setback for the American company in the country at the time. Owned by Amazon and Walmart, Flipkart struggled to remove hundreds of thousands of items from their stores and invested much more indirectly in affiliates.
In June of this year, India proposed even stricter e-commerce rules prohibiting, among others, Amazon, Flipkart and other e-commerce players from running their own / private brands. The new proposal calls on e-commerce companies to ensure that none of their affiliated and related parties are listed on their platforms as sellers for direct sales to customers.
“Amazon and Catamaran formed a joint venture in the early days of e-commerce in India with the shared vision of transforming hundreds of thousands of small businesses into a rapidly changing digital world by providing online features that enable them to to access customers in India and worldwide, “said Amit Agarwal, Global Senior VP and Country Head of Amazon India, in a statement.