Amazon Asia Pacific Holdings Private Limited Haverl LLC. Clicktech Retail Private Limited

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Page 1 of 8 COMPETITION COMMISSION OF INDIA Combination Registration No. C-2024/04/1128 23rd July 2024 Notice under Section 6(2) of the Competition Act, 2002 given jointly by Amazon Asia- Pacific Holdings Private Limited, Haverl LLC, Clicktech Retail Private Limited, New Trends Commerce Private Limited, and Clicktech Enterprises Private Limited CORAM: Ms. Ravneet Kaur Chairperson Ms. Sweta Kakkad Member Mr. Deepak Anurag Member Order under Section 31(1) of the Competition Act, 2002 1. On 2nd April 2024, the Competition Commission of India (‘Commission’) received a notice (‘Notice’) under sub-section (2) of Section 6 of the Competition Act, 2002 (‘Act’) jointly given by Amazon Asia-Pacific Holdings Private Limited (‘Amazon Asia- Pacific’), Haverl LLC (‘Haverl’), and Clicktech Retail Private Limited (‘CRPL’) [hereinafter, Amazon Asia-Pacific and Haverl are collectively referred to as the ‘Amazon Acquirers’]. 2. The Notice was filed pursuant to the execution of the Share Purchase Agreement dated 6th December 2023 amongst Amazon Asia-Pacific, Zaffre LLC (‘Zaffre’), Zodiac Wealth Advisors LLP (‘Zodiac’), and Frontizo Business Services Private Limited (‘Frontizo’) [‘SPA’]; Business Transfer Agreement dated 7th February 2024 between Combination Registration No. C-2024/04/1128 Page 2 of 8 CRPL, and Appario Retail Private Limited (‘Appario’) [‘BTA’]; Shareholders’ Agreement dated 28th March 2024 amongst Haverl, New Trends Commerce Private Limited (‘NTCPL’), and NTCPL’s shareholders (‘NTCPL SHA’); and Share Subscription Agreement dated 28th March 2024 amongst Haverl, NTCPL, and NTCPL’s shareholders (‘NTCPL SSA’) [hereinafter, Amazon Asia-Pacific and Zaffre are together referred to as ‘Amazon Shareholders’]. 3. The Proposed Combination envisages the following transactions: Proposed Transaction I - Acquisition of 76% of the issued, subscribed, and paid-up share capital of Frontizo by Amazon Asia-Pacific from Zodiac. Pursuant to this, Frontizo and Appario will become wholly-owned subsidiaries of Amazon Shareholders. Proposed Transaction II – Acquisition of Appario’s business, through a slump sale as a going concern by CRPL. In this regard, it is submitted that Proposed Transaction II will precede Proposed Transaction I and the cessation of Appario’s retail business and de- registration from www.amazon.in/business are condition precedents for the consummation of Proposed Transaction I. Proposed Transaction III – Acquisition of 1% shareholding in NTCPL by Haverl, on or about the date of consummation of Proposed Transaction I and Proposed Transaction II and subject to the completion of Proposed Transaction IV and Proposed Transaction V. Proposed Transaction IV – Issuance of certain additional shares by NTCPL to its promoter, Clicktech Enterprises Private Limited (‘CEPL’). Proposed Transaction V – Issuance of certain additional shares by CRPL to NTCPL. It is submitted that Proposed Transaction IV and Proposed Transaction V involve intra- group transactions within the Poddar Group (defined in subsequent paragraphs). These Combination Registration No. C-2024/04/1128 Page 3 of 8 transactions are proposed to be completed before Proposed Transaction III [hereinafter, Proposed Transaction I, Proposed Transaction II, Proposed Transaction III, Proposed Transaction IV, and Proposed Transaction V are collectively referred to as the ‘Proposed Combination’]. 4. In terms of Regulation 14 of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011, vide letter dated 18th April 2024, certain information and clarifications were sought from the parties. Responses were submitted dated 25th April 2024 and 6th May 2024, after seeking an extension of time. Since responses were not complete, another letter was issued on 21st May 2024 and the responses were submitted dated 28th May 2024 and 4th June 2024, after seeking an extension of time. As these responses were not complete, another letter was issued on 13th June 2024 and a response dated 18th June 2024 was submitted. In furtherance to the response dated 18th June 2024, the parties provided complete information vide submission dated 26th June 2024. 5. In response to the letter dated 18th April 2024, NTCPL and CEPL also became notifying parties by furnishing relevant documents [hereinafter, Amazon Acquirers, CRPL, NTCPL and CEPL are collectively referred to as the ‘Notifying Parties’]. 6. Amazon Asia-Pacific is an indirect wholly-owned subsidiary of Amazon.com, Inc. (‘ACI’), which is the ultimate parent entity of the Amazon group (‘Amazon Group’). ACI has certain indirect subsidiaries either registered in India or having business operations in India (‘Amazon Affiliates’). Amazon Affiliates are engaged in businesses relating to the retail (‘B2C’) market, payment processing, wholesale (‘B2B’) sales, etc. Further, some of the direct or indirect subsidiaries of ACI have stakes in certain entities operating in India (‘Amazon Portfolio Companies’). 7. Amazon Asia-Pacific acts as the seller of record for the distribution of digital Kindle content to end customers in India. It earns fees from the sale of digital content such as e- books, digital magazines, etc. It has also recently started licensing the Amazon brands. Combination Registration No. C-2024/04/1128 Page 4 of 8 Amazon Asia-Pacific does not have a sales office, factory, liaison office, branch office, or franchise in India. 8. Haverl is the direct wholly-owned subsidiary of ACI and belongs to the Amazon Group. It is engaged in the business of making investments. It does not undertake any business activities in India. 9. It is submitted that ACI has, inter alia, investment in the following Indian entities: (a) Amazon Seller Services Private Limited (‘ASSPL’): It operates the online marketplaces i.e., www.amazon.in and www.amazon.in/business (collectively, ‘Amazon India Marketplace’), which facilitates third-party sellers to offer various products for sale to customers on B2C and B2B basis. (b) Amazon Retail India Private Limited (‘ARIPL’): It is engaged in B2C retail trading of food products produced and/or manufactured in India. (c) Sociofy Enterprise Private Limited (‘Sociofy’): It operates the marketplace, ‘Glowroad’ which facilitates the sale of various products by third-party sellers to customers across India. (d) Amazon Wholesale (India) Private Limited (‘AWIPL’): It is engaged in B2B sales/ wholesale trading of various products in India. (e) Amazon Web Service India Private Limited (‘AWS India’): It is engaged in the provision of IT services. (f) Amazon Development Centre India Limited (‘ADCIL’): It is, inter alia, engaged in the provision of administrative support services such as financial transaction processing and accounting services to businesses. (g) Amazon Pay (India) Private Limited (‘APIPL’): It is engaged in operating a semi- closed loop wallet ‘Amazon Pay’ and offers digital payment solutions to end- customers and merchants. (h) Amazon Transportation Services Private Limited (‘ATSPL’): It is engaged in providing logistics and transportation services and provides its services only to ASSPL. Combination Registration No. C-2024/04/1128 Page 5 of 8 (i) Amazon Digital Services Private Limited (‘ADSPL’): It provides software tools and technical solutions to businesses to enable them to sell online. (j) Amazon Smart Commerce Solutions Private Limited (‘Amazon Smart Commerce’): It is engaged in providing Business Onboarding and Integration Services (‘BOIS’)1 to sellers on the Amazon India Marketplace. 10. Frontizo is an Indian company, which is held by Amazon Shareholders [24%] and Zodiac [76%], an entity that is owned and controlled by members of the Patni family. Frontizo is engaged in the business of providing customer support services to customers on the Amazon India Marketplace, and to customers of the online marketplace operated by Amazon Group in North America. 11. Appario is a wholly-owned subsidiary of Frontizo. Appario is engaged in B2C and B2B business in India, and currently offers goods for sale on Amazon India Marketplace operated by ASSPL. 12. Poddar Group includes entities promoted by Mr. V. B. Poddar, namely CRPL, NTCPL, CEPL, and their parent entity, New Trends Trust (‘NTT’). Mr. V. B. Poddar’s affiliates are also considered for assessment. 13. CEPL is a wholly-owned subsidiary of NTT and is currently not engaged in any business activities in India. Apart from NTCPL and CRPL, CEPL does not have any other direct or indirect subsidiaries in India. 14. NTCPL is a wholly-owned subsidiary of CEPL and is currently engaged in the business of wholesale trading of sugar, primarily through the offline channel. However, NTCPL 1 The parties have identified BOIS as services that can be availed individually or as a suite of services by customers who may be sellers/service providers/small and medium businesses (‘SMBs’) or E-Commerce entities themselves. These services are aimed at assisting in the seamless integration of the offline operations of a business with the online channel to effectively operate across channels, concurrently. BOIS includes: (a) onboarding/acquisition of sellers/service providers, (b) cataloging and listing, (c) training, upskilling, advisory, and value-added services, (d) advertising and marketing, (e) digital payment integration, (f) invoicing, (g) website creation, (h) inventory management and order fulfillment. Combination Registration No. C-2024/04/1128 Page 6 of 8 will discontinue the business of wholesale trading of sugar through NTCPL prior to the consummation of Proposed Transaction III and commence the business of providing BOIS. 15. CRPL is a subsidiary of NTCPL and is currently engaged in B2C and B2B business in India, and currently offers products for sale to customers on the Amazon India Marketplace. Its only offline presence is the sale of its own unsellable or damaged inventory. 16. It is submitted in the Notice that in terms of the applicable Foreign Direct Investment Policy (‘FDI Policy’), foreign investment is not permitted in the inventory-based model of e-commerce. Accordingly, to comply with the FDI Policy, parties to the Proposed Transaction I have agreed that Appario will cease its B2C business and will also deregister as a seller from www.amazon.in/business, prior to the consummation of the Proposed Transaction I. 17. Based on the business activities of Amazon Group, Amazon Affiliates, Amazon Portfolio Companies, Poddar Group, and Frontizo/Appario, it is submitted that the entities exhibit horizontal overlaps in (i) B2C market and its segments; (ii) B2B market and its segments; and (iii) provision of BOIS. Within B2C retail, the parties exhibit horizontal overlaps in the organized and online segment. Within B2B wholesale, the entities exhibit horizontal overlaps in the organized segment. Further, the entities also exhibit overlaps at the product categories level in B2C retail and B2B wholesale including their segments. 18. Based on the submission of the parties, the Commission observed that the incremental market share due to the presence of CRPL in overall B2C and B2B or in any narrower segments is not such as to raise any competition concern. Further, NTCPL is yet to commence operations in the BOIS market and there are various players present in the market. Therefore, the Proposed Combination is not likely to raise competition concerns. Combination Registration No. C-2024/04/1128 Page 7 of 8 19. Similarly, based on the business activities of Amazon Group, Amazon Affiliates, Amazon Portfolio Companies, Poddar Group, and Frontizo/Appario, it is submitted that these entities exhibit various vertical and complementary relationships, existing and potential, such as in the provision of IT services, administrative support services, software tools and associated technical services, B2B sales, BOIS, logistics services, facilities management services, and payment services. The Commission noted that these linkages are not likely to cause any foreclosure concerns. 20. The Commission decided to leave the delineation of the relevant market open, as it was observed that the Proposed Combination is not likely to cause an appreciable adverse effect on competition in any of the plausible relevant market(s) in India, based on the foregoing paragraphs. 21. It is observed that the Proposed Combination would result in the cessation of business of one existing seller on the Amazon India Marketplace (i.e., Appario) whose entire business will be acquired by another existing seller (i.e., CRPL) as a going concern. CRPL will continue to operate on the Amazon India Marketplace and will continue to offer the selection of products offered by Appario (in both B2B and B2C markets). The presence of CRPL across various markets/segments is not such as to cause any competition concerns. 22. Considering the material on record, including the details provided in the Notice and the assessment of the Proposed Combination based on the factors stated in Section 20(4) of the Act, the Commission is of the opinion that the Proposed Combination is not likely to have appreciable adverse effect on competition in India. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act. 23. This order may be revoked if, at any time, the information provided by the Notifying Parties is found to be incorrect. Combination Registration No. C-2024/04/1128 Page 8 of 8 24. The information provided by the Notifying Parties shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act. 25. The Secretary is directed to communicate to the Notifying Parties accordingly.