Contradict earlier reports which claimed that Amazon paid 8,546 crore ($ 1.2 billion) in legal fees in India in 2019 and 2020, the company said it only paid 52 crore for the fiscal year ending in March 2020. The company published this clarification in a letter dated September 28 to Minister of Commerce Piyush Goyal, seen by The Hindu.
The e-commerce giant’s legal fee figure was brought to light after The Morning Context reported on September 20 that Amazon is investigating a whistleblower complaint alleging money paid by the company for legal fees has been turned into bribes paid to government officials by its legal representatives. in India. While this report did not come up with any numbers, it prompted other media to uncover the legal fee charges stemming from public documents filed by the company.
The next day, two anonymous government officials said Hindustan times that the government investigate the matter and that the appropriate agency investigate if necessary. “The unusually high spending on legal fees certainly raises doubts, especially when the government has received written complaints from various people, including the association of local retailers,” one of the officials told HT.
Soon after, Amazon confirmed that it would investigate the corruption allegation, but said the legal fee figure reported by the media was inaccurate because it included fees paid by an entity that is not a subsidiary. of the business and it was calculated from a line item in the public accounts filings made by the business that included substantial non-legal expenses such as finding clients, merchant integration services, costs customer service, outsourcing, tax advisers, logistics support services, etc.
Amazon faces ICC investigation and new e-commerce rules
The corruption allegations come as Amazon faces an Indian Competition Commission (ICC) investigation into anti-competitive practices and the government seeks to tighten its grip on the company with new e-commerce rules.
After nearly a year of legal back-and-forth, the Supreme Court last month dismissed Amazon and Flipkart’s demands to stop the ICC investigation. “Big companies have a lot of power because they have large sums of money with them, they do their best to maintain their free will in the e-commerce market. To hurt our small businesses and our merchants. And after a while, it harms our consumers in the long run, ”Commerce Minister Piyush Goyal said in response to the verdict.
The ICC investigation against Amazon and Flipkart was ordered to investigate four alleged violations:
- Exclusive launch of mobile phones
- Promote favorite sellers on their websites
- Deep discount practices
- Prioritize certain seller listings over others
Even before the investigation resumed, the government on June 21 proposed changes that give more bite to the existing 2020 consumer protection (e-commerce) rules and address many of the concerns the ICC is investigating. The proposed changes, which were made in response to repeated complaints against Amazon and Flipkart, include new rules to tackle abuse of FDI regulation, the establishment of a grievance mechanism, new criteria display and labeling for foreign products, the ban on flash sales, the introduction of relief liability, among others.
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