Amazon is set to acquire the stake of Narayana Murthy-owned Catamaran in Prione Business Services Private Ltd, the parent company of Cloudtail India Private Ltd, one of the largest sellers on the e-commerce giant's India platform.
Prione Business Services, was set up as a joint venture (JV) between Catamaran and Amazon in 2014. The entity will be acquired by Amazon subject to requisite regulatory approvals, both companies said on Wednesday.
"Amazon will acquire Catamaran’s shareholding in Prione in compliance with applicable laws including all assets and liabilities. The businesses of the joint venture shall continue under the leadership of the current management and on receipt of regulatory approvals, the board of Prione & Cloudtail will take steps to complete the transaction in compliance with applicable laws," the joint statement said.
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On August 9, 2021, both Catamaran and Amazon had announced their decision to not continue the JV beyond the end of its current term of May 2022. The announcement had come on the same day when the Supreme Court dismissed petitions by Amazon as well as of rival Flipkart to quash a probe by the competition watchdog over alleged practices such as preferential treatment to sellers.
Both companies announced on August 9 that Prione Business Services, the joint venture between Amazon and Catamaran is coming up for renewal on May 19, 2022 and that the two partners have mutually decided to not continue their joint venture beyond the end of its current term.
Amazon had to lower its stake in Prione in 2019 from 49 percent to 24 percent to meet the Press Note 2 (2018) guidelines, with Catamaran buying out the rest of the stake. The guidelines state that foreign ecommerce companies cannot hold equity in any seller on the platform.
While Amazon did not clarify the next course of action post the acquisition, Cloudtail will legally not be allowed to sell on the platform to comply with the rules.
"The business of Prione and Cloudtail will continue as usual, till receipt of all regulatory approvals. Catamaran and Amazon have a high compliance bar and we conduct all business activities in compliance with applicable laws. We will ensure that the transaction is in compliance with applicable laws," Amazon said in a statement.
The move comes even as Amazon is facing a probe from the Competition Commission of India over alleged anti-competitive practices such as preferential treatment to some sellers such as Cloudtail, on the basis of a complaint filed by Delhi Vyapar Mahasangh, a traders' association.
Some online seller bodies, such as the All India Online Vendors Association (Aiova) have said they are "exploring ways to challenge this combination agreement."
(Edited by : Jomy Jos Pullokaran)
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