For more than a year, Amazon and India’s Future Group have been locked in a complicated legal impasse that halted the sale of Future’s assets to rival Reliance Industries of the US firm worth $3.4 billion (about Rs 24,700 crore). Given – which has no end. ,
The controversy, seen as the key to deciding to get the upper hand in one of the world’s fastest growing retail markets, is here.
What caused the controversy?
In 2019, heroine And Future, the number two player in India behind the market leader RelianceHe became a business partner when the US company invested $200 million (approximately Rs 14,796 crore) in a gift voucher unit of the Indian group.
That deal, Amazon argues, came with some non-compete clauses that barred Future from selling retail assets to certain rivals, including Reliance, run by one of India’s richest men, Mukesh Ambani, The deal also included clauses for settlement of any disputes under rules set by the Singapore International Arbitration Centre. But in 2020, Future – badly hit by the COVID-19 pandemic – decided to sell assets to Reliance.
Amazon then approached intermediaries in Singapore and successfully blocked the sale. The two sides have challenged each other with lawsuits in Indian courts, including the Supreme Court because the “seat of arbitration” remains in New Delhi and Indian law governs the proceedings.
What are Amazon and Future called?
Amazon argues that the various agreements it signed with Future in 2019 gave it exclusive rights over Future’s retail assets, some of which were eventually expected to ease India’s regulations for foreign investors. A possible Future-Reliance deal “destroys” the latter possibility, the US company has said.
Future denies any wrongdoing, saying Amazon is illegally seeking to take control of Future’s retail business. Future Retail – the group’s flagship retail arm – says it is facing liquidation and more than 27,000 of its employees could be jobless if the Reliance deal fails.
What is the big picture?
It is at stake whether Amazon can become a major force in Reliance’s $900 billion (approximately Rs 6658449.78 crore) retail market with 1.3 billion subscribers.
Reliance Group comprises 1,100 supermarkets, while Future has over 1,500. Both are rapidly expanding into e-commerce, but the future deal will immediately boost Reliance’s retail footprint, which has attracted foreign investors in the business.
For its part, Amazon has invested $6.5 billion (about Rs 48081 crore) in India, which it counts as a major growth market where it is a major e-commerce player. The Future partnership had already allowed Amazon to promote its online portfolio of grocery delivery by integrating the Indian company’s stores on its website.
Keeping the future away from Reliance chimes in with Amazon’s efforts to counter billionaire Ambani’s growth plans. In a confidential legal filing, Amazon said that Reliance’s consolidated position with Future would “further restrict competition in the Indian retail market”.
How did India’s Antitrust Agency get involved?
Future complains to antitrust agency of India, Competition Commission of India (CCI), that Amazon was making false and contradictory submissions about the intent of the 2019 deal.
Amazon said it never hid any information, but last December the CCI suspended its approval of the 2019 deal with Future, saying it was “a deliberate design on the part of Amazon to suppress the true scope” of the deal and its interest in Future’s retail businesses. .
While Amazon argues that the CCI acted beyond its powers, Future says the US company no longer has any right to assert its claims because the 2019 deal now lacks regulatory approval.
In a setback to the US giant, the Delhi High Court this month stayed the Singapore arbitration proceedings between the two sides in light of the Indian antitrust decision.
The arbitration has since been halted, but Amazon has appealed the decisions in Indian courts that are yet to hear the case.
© Thomson Reuters 2021
Get the latest from the Consumer Electronics Show at Gadgets 360, our CES 2022 Hub.