The Competition Commission of India has sought clarity from private equity firm Samara Capital on Amazon’s role in the proposed acquisition of Aditya Birla Group’s More, according to a report in The Economic Times quoting sources.
The report follows the US e-commerce giant’s investment arm Amazon.com NV Investment Holdings LLC and private equity firm Samara Capital seeking the panel’s approval to acquire supermarket chain More from the Aditya Birla group.
Amazon’s investment arm has proposed to acquire a 49 per cent stake in Witzig Advisory Services, a wholly-owned subsidiary of Samara Capital, which entered into an agreement to acquire 99.99 per cent of Aditya Birla Retail Ltd (ABRL) in September 2018 for around Rs Rs 4,200 crore.
As per the terms of the agreement, Samara Capital will continue to hold the remaining 51 per cent stake in Witzig Advisory.
According to the news report, the panel has sought information from Witzig Advisory Services, including questions about the deal such as whether it is in compliance with the recently revised regulations for foreign direct investment (FDI) in e-commerce.
The Competition Commission has also raised concerns over Amazon’s possible day-to-day involvement in More’s functioning besides integration with its grocery operations.
Under the new FDI norms norms, “e-commerce entity providing a marketplace will not exercise ownership or control over the inventory… i.e. goods purported to be sold. Such an ownership or control over the inventory will render the business into inventory based model.”
Also, entity having equity participation by e-commerce marketplace entity or its group companies, or having control on its inventory by e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such marketplace entity, according to the guidelines.
These guidelines, effective from February 1, 2019, are likely to impact Amazon’s plans to expand its India operations by integrating More with its online operations.
As per The Economic Times report, Witzig is yet to file its responses to the Competition Commission.