US-based e-commerce giant Amazon should not have participated in the hearings conducted by the Competition Commission of India (CCI), in connection to the Future Coupons deal, if it believes that the antitrust agency has no revoking powers, the Confederation of All India Traders (CAIT) said on December 15.
The traders' body referred to a Reuters report, released on December 14, which cited a confidential document to claim that Amazon has conveyed to the CCI that the latter does not have the legal power to revoke its deal with Future Coupons Pvt Ltd (FCPL) -- that was cleared by the agency itself in 2019.
"The power to revoke an approval is a drastic power and is not available to a statutory authority unless expressly provided" in Indian law, Amazon reportedly argued.
Condemning this argument reportedly presented by Amazon, the CAIT said it is an "afterthought just to get the matter escaped from the CCI".
The company is showing a "my way or the high way attitude", the association said, adding that if Amazon believes that CCI does not have revoking power, "why they indulged into various hearings of CCI?"
power," CAIT added.
Amazon is accused of concealing facts from the CCI while seeking approval for its its 2019 deal to pay $200 million for a 49 percent stake in FCPL.
The company has been charged by CAIT of not revealing its strategic interest in Future Retail while seeking approval for the deal with the latter's gift voucher unit.
To validate their claim, the CAIT 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 control the parent firm, Future Retail Ltd (FRL).
Here is the email extract shared by CAIT:
"Structure: Due to the recent PN2 restrictions under Indian foreign investment laws, we will use a “twin-entity investment” structure to invest in Future Retail.....The number of equity shares of Future Retail to be held by Future Coupons has been calculated such that Amazon can indirectly hold the same number of shares of Future Retail that Amazon would have acquired if Amazon had directly invested INR14B in Future Retail at a price per share representing a 25% premium on the minimum regulatory price prescribed for issuance of fresh shares of a listed entity under Indian law. In summary, Amazon is paying a premium of 25% (INR2.8B i.e ~$41MM at current exchange rates) over the regulatory price of the securities of Future Retail. This premium is being paid on account of the strategic rights and Call Option being provided to Amazon."The approval sought from Bezos and the approval given by him is for "the investment of Rs 1,431 crore is in FRL" and not FCPL, the CAIT alleged, adding that, "FCPL is only a vehicle in the ‘twin-entity’
On the other hand, in its application seeking clearance for the Amazon-FCPL deal, the e-commerce giant had used "paragraphs after paragraphs" to explain the "potential of the gift and loyalty card business of FCPL", CAIT added.
"Amazon deliberately attached a business plan of gift and loyalty card business of FCPL as if the money of Amazon was to be invested in this business of FCPL and Amazon would reap returns on such investment. This is a deliberate falsification to deceive the CCI," the traders' body further said.Notably, the Reuters report pointed out that CCI's 2019 approval order says its decision "shall stand revoked if, at any time, the information provided" is found to be incorrect.