CCI suspends 2019 Amazon- Future deals and fines Rs.200 Crore

India’s antitrust body, the Competition Commission of India, suspended the deal between the giant US company Amazon and Kishore Biyani, headed Future Retail, to buy a stake in Future Group, and has imposed a Rs 202 crore penalty for major violations. It also imposed a separate penalty of Rs 2 crore for suppressing the actual scope and purpose of the combination, a term used in competition law for acquisition, merger, or amalgamation of two or more enterprises. Amazon has yet to respond to the decision.

CCI asserts that certain infractions are the result of “a deliberate design on Amazon’s part to suppress the actual scope and purpose of the combination” and that there is no mitigating factor. The competition watchdog stated in its 57-page order that it believed it was necessary to re-examine the merger because the two parties were well-known in the online marketplace and offline retailing, and had discussed strategic alignment between their businesses. According to the commission’s order, Amazon should have notified the combination of commercial agreements with Future Group in order to establish strategic alignment and partnership between Amazon Group and FRL, as well as have a “foot in the door” in India’s retail sector.

In August 2019, Amazon paid approximately Rs 1,500 crore for a 49 percent stake in Future Coupons, the promoter entity of FRL.A year later, in August 2020, Future Group and Reliance Industries (RIL) agreed to sell their assets for $3.4 billion.

Amazon issued a legal notice to Future in October for striking a deal with RIL. It claimed that Future’s $3.4 billion asset sale to RIL violated an agreement with Amazon, citing the latter’s non-compete clause. Any disputes would be arbitrated under the rules of the Singapore International Arbitration Centre (SIAC). In the same month, Amazon received a favourable ruling in its SIAC antitrust case.

Future filed a complaint with the Delhi High Court (HC) in November 2020, alleging that Amazon interfered with the deal with RIL. Since then, Amazon has been fighting FRL in court to stop the Kishore Biyani-led project.

The Supreme Court of India (SC) ruled in Amazon’s favour in August, upholding the Singapore emergency arbitrator award against the Future-Reliance deal as enforceable in India. However, in September of this year, the Supreme Court stayed proceedings before the Delhi High Court, ordering no coercive action. The National Company Law Tribunal, CCI, and the Securities and Exchange Board of India were also ordered by the court not to issue any final orders in the dispute for four weeks.

In November this year, the SC extended by two weeks the time granted to CCI by the Delhi HC to take a decision with respect to the show-cause notice issued by it to Amazon over the deal with Future Group.

The Confederation of All India Traders has applauded this move (CAIT). CAIT National President B C Bhartia and Secretary-General Praveen Khandelwal said the move is a signal to other foreign-funded e-commerce enterprises not to break the law, rules, or the government’s foreign direct investment policy.

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