India’s antitrust agency on Friday suspended Amazon.com’s 2019 deal with Future Group, potentially scuttling the US e-commerce giant’s efforts to prevent the sale of Future Key retail assets to the Indian market leader.
Regulator ruled that US company suppressed information when seeking regulatory approval on investment in Indian retailer Future Group two years ago.
heroine has successfully used the terms of its $200 million (approximately Rs 1,500 crore) investment in Futures in 2019 for months to stop the Indian retailer’s attempt to sell its retail assets to Reliance Industries for $3.4 billion (about Rs 25,950 crore). Can you
The regulator’s 57-page order said it “considers it necessary to examine the combination (deal) afresh,” adding its approval from 2019 will remain suspended “till”.
The CCI order said Amazon “suppressed the true scope” of the deal and made “false and false statements” while seeking approval.
“The approval has been suspended. This is absolutely unprecedented,” said Shweta Dubey, partner at Indian law firm SD Partners.
“This order appears to have given the CCI a new right to withhold the approval of the combination,” he said.
The antitrust motion of the 2019 Future Deal now suspended could undermine Amazon’s legal status and retail ambitions, while easing Reliance – said people aware of the controversy over the acquisition of number two player Future – the country’s biggest retailer.
The CCI also imposed a fine of around Rs 1 lakh. CCI said that the US company would be fined 200 million ($27 million), adding that Amazon would be given time to submit the information again to seek approval.
Future Group, however, is unlikely to cooperate with Amazon if it tries to reapply for antitrust clearance following the CCI’s decision, a source with direct knowledge told Reuters.
The source said the Indian company is ready to take Friday’s decision of the CCI before various legal forums to argue that Amazon has no legal basis to challenge the sale of its assets.
Future and Reliance did not respond to a request for comment. Amazon said it is reviewing the order “and will decide on its next steps in due course.”
The dispute over Future Retail, which has more than 1,500 supermarkets and other outlets, is Jeff Bezos’ most hostile flashpoint between Amazon and Reliance, run by India’s richest man Mukesh Ambani, as they have the upper hand in winning over retail consumers. try to achieve.
In the grip of the COVID-19 pandemic, Future decided to sell its retail assets to Reliance for $3.4 billion last year, but Amazon managed to successfully block the sale through legal challenges.
Amazon cited breach of contracts by Future, arguing it agreed to pay $200 million in 2019 for a 49 percent stake in Future’s gift voucher unit, including Reliance to its parent, Future Group. Barred some rivals from selling their Futures retail business.
The CCI review of the deal began after Future, which denies any wrongdoing, complained that Amazon was making contradictory statements about the intent of the 2019 transaction before various legal forums.
In June, CCI told Amazon its interest in investing in the US firm Future’s gift voucher unit in 2019 to address gaps in India’s payments industry. But later, the CCI said, Amazon disclosed in other legal fora that the foundation of its investment in the Future unit was to acquire exclusive rights over the retail arm, Future Retail.
In Friday’s order, the CCI said there was “a deliberate design on Amazon’s part to suppress the true scope and purpose of the deal”.
Amazon denied before CCI’s decision hide any information and warned the watchdog that Future’s bid to open the 2019 deal “will further restrict competition in the Indian retail market” to allow Reliance to consolidate its position.
© Thomson Reuters 2021