India’s brick-and-mortar retailers say Amazon and Flipkart favour select sellers on their platforms and use complex business structures to bypass the foreign investment laws, hurting smaller players. The companies deny any wrongdoing.
The Enforcement Directorate has asked Walmart’s Flipkart and its founders to explain why they shouldn’t face a penalty of $1.35 billion for alleged violation of foreign investment laws, three sources and an agency official told Reuters.
The ED agency has been investigating e-commerce giants Flipkart and Amazon.com Inc for years for allegedly bypassing foreign investment laws that strictly regulate multi-brand retail and restrict such companies to operating a marketplace for sellers.
The official, who declined to be named, said the case concerned an investigation into allegations that Flipkart attracted foreign investment and a related party, WS Retail, then sold goods to consumers on its shopping website, which was prohibited under law.
News Source: Economic Times |India Times
