India’s trust agency on Friday suspended Amazon.com’s 2019 deal with Future Group, blocking efforts to prevent US e – commerce company Future’s retail assets from being sold to Indian market leader.
Two years ago, the regulator ruled that the US company had withheld information when it sought regulatory approval to invest in Future Group, an Indian retailer.
The ruling by the Competition Commission of India (CCI) could have long-term consequences for Amazon’s legal battles with its now-separated ally Future.
Amazon has successfully used the terms of its $ 200 million (approximately Rs. 1,500 crore) futures package in 2019 to thwart an Indian retailer’s attempt to sell $ 3.4 billion (approximately Rs. 25,950 crore) in retail assets to Reliance Industries.
The regulator’s 57-page order states that it considers it “necessary to reconsider the merger (agreement)” and added that its approval from 2019 will be “postponed until then”.
The CCI’s order stated that Amazon had “suppressed the real purpose” of the agreement and provided “false and misleading statements” when seeking approvals.
“Accreditation has been suspended. This is completely unprecedented,” said Swetha Dube, a partner in the Indian law firm SD Partners, a former CCI official.
“This order seems to have found new power for the CCI, suspending admission approval,” he added.
Those familiar with the controversy said that while the distrust of the 2019 futures deal is now on hold, it could hamper Amazon’s legal status and retail aspirations, while at the same time making it easier for Reliance – the number two player in the country to acquire the number of player futures.
CCI also raised about Rs. The CCI also said that Amazon would be given the opportunity to resubmit the information to get approvals of $ 200 million ($ 27 million) in the US company.
A source with direct knowledge told Reuters that Future Group was unlikely to cooperate with Amazon if it tried to reapply for a no-confidence motion after the CCI’s decision.
The Indian company is set to take CCI’s decision on Friday before various legislative bodies to argue that Amazon has no legal basis to challenge the sale of its property.
Future and Reliance did not respond to a request for comment. Amazon said it was reviewing the order and would make a timely decision on its next steps.
The controversy over Future Retail, which has more than 1,500 supermarkets and other retail outlets, is the most hostile flashpoint between Jeff Bezos’ Amazon and Reliance, run by India’s richest man Mukesh Ambani.
Future affected by the Kovit-19 epidemic decided to sell its retail assets to Reliance for $ 3.4 billion last year, but Amazon was able to successfully block the sale through legal challenges.
The terms, agreed in 2019 to pay $ 200 million for a 49 percent stake in Future’s gift voucher unit, cited Amazon Futures’ breach of contract, which prevented its parent Future Group from selling futures retail to certain competitors, including Reliance.
The CCI review of the deal began after Future complained that Amazon had issued conflicting statements before different legislatures about the purpose of the 2019 transaction, denying that it had done anything wrong.
In June, CCI explained to Amazon its interest in investing in the Future Gift Voucher Unit, a US company in 2019, which will bridge the gaps in India’s payments sector. But then, CCI said, the basis of Amazon’s investment in the Future unit in other legal forums was the acquisition of exclusive rights to retailer Future Retail.
In Friday’s order, CCI said “there is a deliberate design on the part of Amazon” to crush the real purpose and purpose of the deal.
Prior to the CCI’s decision, Amazon had refused to divulge any information and warned the watchdog that future attempts to relinquish the 2019 deal to confirm its position on Reliance would “further restrict competition in the Indian retail market”.
© Thompson Reuters 2021