Amazon hid facts during deal for Future arm: CCI

The Competition Commission of India (CCI) has issued a show-cause notice to Amazon.com Inc., seeking to know why certain facts were not disclosed about its 2019 purchase of a 49% stake in a Future Group entity.

The competition watchdog’s notice comes as Amazon, armed with a favourable arbitration award, is fighting a legal battle in India and overseas to restrain Future Retail Ltd from selling its assets to rival Reliance Retail Ltd for 24,713 crore.

Amazon claims the terms of its 2019 stake purchase in Future Coupons (Pvt.) Ltd prohibits the sale. The Supreme Court is hearing the matter. In 2019, Amazon.com secured CCI approval for its 49% stake purchase in Future Coupons for 1,493 crore.

A spokesperson for Amazon acknowledged the CCI notice but did not comment on the merits of the allegations, given the dispute with Future Group is sub judice. “We are in receipt of a show cause-notice from CCI based on the complaint filed by Future. We are committed to complying with the laws of India and will extend full cooperation to CCI on this matter. We are confident we will be able to address CCI’s concerns,” the spokesperson for Amazon said in a statement.

“As our dispute with Future is pending litigation, and we are also bound by confidentiality obligations, we are unable to comment on the merits or substance of any allegations , and that seems to be raised deliberately in the media in the context of ongoing legal proceedings,” said the spokesperson. Mint has reviewed a copy of CCI’s notice to Amazon.

CCI is enquiring why Amazon was allegedly not upfront about its strategic interest in Future Retail when it sought approval for the 2019 deal. An email sent to CCI and Future Group on Thursday evening remained unanswered at the time of publishing. Reuters first reported the development on Thursday.

The CCI show-cause notice was sent to Amazon in June. “The CCI letter is a show cause and not CCI’s allegation, decision or accusation. It is a set of questions, and Amazon will answer it shortly,” said a person directly aware of the show-cause notice. The Supreme Court on Thursday continued to hear the case between Amazon and Future.

The legal battle between Amazon and Future is part of the fierce competition among the country’s retail giants to defend their positions in the e-commerce space amid the rapidly growing demand for online shopping.

Amazon’s Future Coupons investment was subject to terms and conditions, under which Future Retail was prohibited from selling its business to 30 restricted entities, including the Mukesh Ambani group.

Seattle-based Amazon.com on Tuesday asked the apex court to restrain Kishore Biyani-founded Future Group from selling its assets to Mukesh Ambani-owned Reliance Industries Ltd.

Amazon’s concern is that since Ambani’s RIL has already spread its network wide enough and has got over $4.2 billion worth of backing in less than a year from global tech giants and private equity players, any deal with Future Group may give Ambani an edge over Amazon and other players in the retail e-commerce space.

Future Group owns one of the largest offline retail networks in the country, with over 1,500 Big Bazaar and fbb stores.

Amazon also has a host of other challenges, a key growth market where it has committed $6.5 billion in investments, including a separate CCI probe into alleged practices that small businesses say have hurt them.

In addition, it faces the prospect of more regulations that would restrict the sale of private labels and would prohibit the U.S. firm from allowing its affiliates to list products on its website. The CCI letter compared three sets of submissions Amazon made to it in 2019 with submissions made later to other legal forums, saying they were “contradictory.”

In particular, it said Amazon had explained its interest in investing in Future’s coupon unit as one that would address gaps in India’s payments industry. But the letter stated Amazon had disclosed in other legal forums that the foundation of its relationship with Future Coupon was certain special rights it obtained over Future Retail.

“Amazon has concealed its strategic interest” in Future Retail, the letter said, adding: “Such interest and the purpose of the combination … was not disclosed to the Commission despite specific requirements.”

With inputs from Reuters


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