ED shortlists 5 sellers each on Amazon, Flipkart for probe, flags unfair practices

“During searches, relevant documents have been seized from the premises of the 10 sellers and are being examined. These are sellers who are suspected to have got preferential listing on the platforms. We also believe the platforms and the sellers are linked,” an official said.

Agency sources said the operations of Amazon and Flipkart are suspected to be in violation of rules under which the companies brought in foreign direct investment (FDI). It is this FDI that has allowed the ecommerce giants to offer significant discounts on products, sources said.

“By preferential listing of certain sellers who may be linked to them, Amazon and Flipkart are virtually setting up their own inventories and selling products. The FDI rules… do not allow this. It is a violation of FEMA. The 10 sellers… have the lion’s share of the business… This has defeated the whole purpose of opening up the retail sector for e-commerce which was to give brick and mortar retailers in India a bigger market to tap,” the ED official said.

Some of the top sellers on one of the ecommerce platforms had direct stake from the company. The same was divested after the Competition Commission of India began its probe. The CCI probe however, stands challenged in a court. While neither Amazon, nor Flipkart responded to questions sent to them, a senior official in one of the companies expressed surprise at ED probe when CCI probe stands challenged.