The Competition Commission of India (CCI) on December 17 suspended Amazon's deal with Future Group after it reviewed complaints that the American e-commerce giant concealed information while seeking regulatory approval.
In a 57-page order, India’s anti-trust regulator said Amazon suppressed “the actual purpose and particulars” of the 2019 deal and sought to “establish false representation and suppression of material facts”. CCI said it was now “necessary to examine” the deal afresh and said its approval "shall remain in abeyance" until then.
Amazon was charged by the complainants - Future Coupons Private Ltd (FPCL) and the Confederation of All India Traders (CAIT)- of not disclosing the intent to indirectly control the parent firm, Future Retail Ltd, through its acquisition of 49 percent stake in FPCL.
"Amazon had suppressed the actual scope of the Combination and had made false and incorrect statements" in relation to the commercial agreement, "which are intertwined into the scope and purpose of the Combination," the CCI order said.
The action comes days after Amazon reportedly argued before the agency that it does not have the legal power to revoke a deal to which clearance has already been issued. "The power to revoke an approval is a drastic power and is not available to a statutory authority unless expressly provided" in Indian law, Reuters had quoted the company as saying.
The CAIT on December 15 released a statement to rebut Amazon's argument. The company should not have participated in any of the CCI proceedings "if it believes the agency does not have the power to revoke a deal", it said.
The traders' body also released an extract from an "email" purportedly sent by top Amazon India official Rakesh Bakshi to Amazon chief executive officer Jeff Bezos. The "email does not talk a word about FCPL’s business", the traders' body said, arguing that it reveals Amazon's intent to indirectly Future Retail.
The CCI order comes at a time when Amazon and Future Group have been engaged in a rough battle in Indian courts after Future agreed to sell its assets to Mukesh Ambani's Reliance Group on a slump basis for Rs 24,500 crore last year.
Future Group complained to CCI that Amazon concealed salient parts of their contract while seeking approval to purchase its unit Future Coupons Private Ltd in 2019.
Amazon and Future have for months been locked in a fierce court battle over the sale of Future Retail to Reliance Industries Ltd (RIL). Amazon alleges that Future violated their contract—a $200 million investment in 2019—by selling its retail assets to RIL last year. Future says it did no wrong.
Last month, independent directors of FRL had also alleged that Amazon had misled CCI. It was earlier in talks to invest directly in the Indian retail company, and it changed its plan only after the government came up with the Press Note 2 rules which tightened norms for foreign e-commerce entities operating in India.
They had also alleged that Amazon never intended to invest in Future Coupons Pvt Ltd (FCPL) because of its “unique business model and strong growth potential” – the reasons which Amazon had presented to the competition regulator.
The independent directors examined the pre-contractual negotiation records of Amazon's investment in FCPL and found that the representations made by Amazon in its CCI application “completely contradict internal correspondences”.Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.