Amazon is not entitled to object to the Future Group-Reliance Retail Ventures deal because “it doesn’t have skin in the game,” senior advocate Harish Salve told the Delhi Court on Thursday.
The former solicitor general of India, who is representing Future Retail, argued that as per the Companies Act 2013, entities with less than 10 percent shareholding cannot object to the scheme of arrangement. In August this year, Future Group presented a scheme of arrangement which envisioned a slump sale of assets to Reliance for around Rs 25,000 crore.
A “passive holding of less than 10 percent does not entitle one to object to such schemes. Amazon is misrepresenting to the world that FRL (Future Retail) has flouted a dishonest agreement. Amazon has no rights over FRL and cannot control its board. FRL was free to act,” he stated.
Also Read: How Amazon tried to exercise rights of controlling shareholder in FRL without owning a stake
Amazon doesn’t have a direct stake in Future Retail. It holds 49 percent in Future Coupons which in turn holds 9.8 percent in Future Retail. But it contends that the Indian group breached agreements and got an injunction from an emergency arbitrator in Singapore. Because it couldn’t invest directly in Future Retail, the American behemoth bought a stake in Future Coupon in the process securing some rights, giving itself effective veto power over Future Retail.
Salve further argued that Amazons claim’s, if any, lie against the Biyanis and Future Coupons and through the current process is only Amazon looking to cause delays – which will hurt employees, public shareholders and stakeholders.
“Emergency arbitrator award is a piece of paper, nothing more, but Amazon is acting like the East India Company of 21st Century – their idea is that you either do business with me or shut down,” he said, and accused Amazon of “trying to kill competition.”
Also Read: Moneycontrol Analysis | Amazon-Future deal: Tail wagging the dog
The Future Group employs 50,000 people and owes Rs 18,000 crore to financial institutions and Rs 7,500 crore to suppliers and vendors. Experts have said that Amazon’s delaying tactics could well push it into a painful bankruptcy.
“This is an anti-competition move. Amazon is trying to show that it has the power to bring FRL to a grinding halt. Since competition law prevents companies from selling cheaply and running competition into the ground… once the competition is gone, you are free to act as per your whims,” Salve told the court.
He further said that Amazon is looking to hinder Reliance as it fears competition.
“In India, Reliance is a muscular company, it will give you a run for your money. What stops Reliance from launching its own digital marketplace? It will cause direct competition between Amazon and Reliance, Indian consumers will gain,” the eminent advocate said.
He asked the court to step in and set the tone. “I'm inviting the court to hold that the basic assertion that Amazon has rights in FRL is wrong. Please declare that my board is free to act. If Amazon has been backstabbed by Biyanis, let it act against them,” he reiterated.
He also noted that even though recommended, Emergency Arbitration has not yet been brought in Indian law. “It may be done tomorrow. The endeavour behind Arbitration Centres is to make it attractive for international arbitration. To say rules of Arbitration Centres should be read into Arbitration Law is too much,” he added.
“I have not come here challenging the award. This is also not a proceeding to enforce the award. Amazon is saying that it (the arbitration award) concludes the issue. I'm not saying anything,” Salve stated.
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