Cloudtail says CCI detained its employees illegally during raid

A former top seller for Amazon, Cloudtail, has accused the country’s antitrust agency of illegally detaining its employees during a raid over suspected competition law violations, court documents show.

Cloudtail, among a handful of online sellers raided in an investigation of Amazon and Walmart's Flipkart over suspected preferential treatment on e-commerce platforms, argued in a court filing the detentions were cause for disallowing materials taken during the raid.

“Employees from the senior management were detained for over 30 hours through the night till the completion of the search and seizure operation,” the May 30 filing said. The operation was conducted on April 28 and 29.

Cloudtail and Amazon did not respond to requests for comment.

A senior source at the Competition

Commission of India (CCI), which conducted the raid, rejected the allegations, saying it had obtained the requisite legal approvals and was in line with the watchdog's regulatory processes. The source was not authorised to speak to the media and declined to be identified.

For years, small traders — a key constituency for Prime Minister Narendra Modi — have alleged that foreign giants favour selected sellers online, violating the laws. The firms deny those allegations.

This is not the only sector, moreover, where the authorities have recently ended up in public legal wrangling with foreign enterprises. In May, Chinese smartphone maker Xiaomi alleged that its top officials faced threats of physical violence and coercion during a probe of remittance payments by the Enforcement Directorate. The agency denied the allegations.

Seized documents

An initial hearing on Cloudtail's filing at the Delhi High Court on June 3 did not mention the detentions, and the contents of the filing have not been posted publicly.

Lawyers for Cloudtail told the judge that the company should not have been raided, since it was merely a third-party seller on Amazon. The CCI lawyer argued that Cloudtail was simply attempting to discourage authorities from proceeding with the probe, noting the wider investigation of Amazon and its relationships with sellers. The judge has scheduled the next hearing on the matter for July 15.