NEW DELHI: India’s financial crime agency has raided the offices of some sellers operating Amazon and Walmart-owned Flipkart as part of an investigation into alleged violations of foreign investment rules, three government sources said on Thursday.

The searches come weeks after Reuters reported that India’s antitrust agency found that the two companies and their sellers violated competition laws by giving priority to selected sellers on their platforms. Both companies maintained that they complied with Indian laws.

The raids are the latest setback for Amazon and Flipkart, which see India as a key growth market where e-commerce sales are soaring.

A senior government source said raids were carried out in New Delhi, Mumbai and Bengaluru, but did not name the vendors whose offices were raided.

“The raids on Amazon and Flipkart sellers are part of ED’s investigation into alleged violations of foreign exchange laws,” said the first government source with direct knowledge.

Amazon and Flipkart did not immediately respond to requests for comment. A representative from the financial crime agency said it had no comment on the matter.

A second government source said the raids were carried out at 19 locations in India and that the agency was investigating how e-commerce platforms indirectly affected the selling prices of goods by violating Indian laws and failing to ensure a level playing field for all. sellers.

The Enforcement Division has been investigating both e-commerce giants for years for allegedly bypassing foreign investment laws that tightly regulate multi-brand retail and restrict such companies from operating a marketplace for sellers.

The first government source on Thursday said the antitrust agency is conducting the latest investigations based on its observations in its recently concluded investigation of the two companies.

Amazon and Flipkart antitrust investigation reports from August, which have not been made public but were seen by Reuters, say the platforms “have end-to-end control over inventory and sellers are merely naming entities.”

A 2021 investigation by Reuters based on Amazon’s internal documents showed that the company maintains significant control over the inventory of some of its largest sellers, even though Indian law prohibits foreign players from holding product inventory.

India’s Commerce Minister publicly criticized Amazon in August, saying its investments in India were often used to cover job losses, adding that such losses “smelt of predatory pricing”.