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First Strike Under New E-Commerce Policy: Amazon’s Proposed Acquisition Of Supermarket Chain ‘More’ Under Scanner
Representative image. (Aniruddha Chowdhury/Mint via Getty Images)
The Competition Commission of India (CCI) has sought details from Samara Capital to understand if Amazon’s proposed acquisition of offline supermarket chain, More, complies with govt’s updated e-commerce policy, reports Economic Times (ET).
On 26 October 2018, the government made substantial changes to the e-commerce policy and barred firms like Flipkart and Amazon from flouting foreign direct investment (FDI) norms for the sector.
In pursuance of the policy, CCI, which is India’s apex competition regulator has asked Samara if Amazon will be involved in the day-to-day operations of More, details of Amazon’s involvement in the supermarket’s board, and how More will integrate with Amazon India’s online marketplace.
It should be noted that Amazon is a US-based company and its investments in India are considered as FDI. India allows only 51 per cent FDI in multi-brand retail and only after satisfying certain conditions. However, India does not allow FDI in the inventory model of e-commerce.
Amazon to buy ‘more’
In September 2018, Amazon and the private equity firm, Samara Capital, agreed to buy More, in a deal estimated to be Rs 4,200 crore.
“After the closure of transaction, Amazon will hold a 49% stake in the company and the balance will be held by Samara. Amazon will be holding less than the threshold of 51% to avoid complications in seeking approvals,” a Mint story quoted.
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