Online marketplace Amazon India has proposed to take full control of Cloudtail, the largest and longest-serving seller on its platform, just months after deciding to end the joint venture, reported Mint.
On Wednesday, Amazon said it approached the Competition Commission of India (CCI) for approval to acquire Narayana Murthy-led Catamaran Ventures stake in Prione, which operates Cloudtail. If CCI approves the deal, Amazon will fully own Prione.
“Prione Business Services Pvt. Ltd, the joint venture between Catamaran and Amazon, will be acquired by Amazon subject to requisite regulatory approvals. On 9 August, the partners had announced their decision to not continue the JV beyond the end of its current term of May 2022. Amazon will buy Catamaran’s shareholding in Prione in compliance with applicable laws, including all assets and liabilities,” Amazon India and Catamaran said in a joint statement.
Once Amazon takes full ownership, though, Cloudtail won’t be able to continue as a seller on the marketplace under India’s current rules.
India prohibits foreign direct investment (FDI) in inventory-based models for e-commerce and permits firms such as Amazon India and Flipkart to work only as marketplaces for other businesses. Under Press Note 2 issued by the commerce ministry’s department of industrial policy and promotion on 26 December 2018, marketplaces cannot participate in seller activities through any group firms. To abide by the law, in 2019, Catamaran Ventures raised its stake in Cloudtail’s parent to 76% from 51% earlier, with Amazon reducing its stake to 24% from 49% earlier.
