CCI charges against Amazon followed Future Group complaint that ecommerce firm hid vital parts of deal

Amazon and Future are locked in a fierce court battle over the sale of Future Retail to RIL.

Last month, India’s competition regulator accused Amazon.com Inc of hiding facts and making false submissions when it sought approval for a investment in a Future Group unit.

The action by Competition Commission of India (CII) followed a complaint by Future Group that Amazon.com concealed salient parts of their contract while seeking approval to purchase its unit Future Coupons Private Ltd (FCL) in 2019 as the Kishore Biyani-led company presses ahead with efforts to transfer its retail assets to Reliance Industries (RIL).

In a letter to CCI, Future contended that if Amazon had informed the regulator about the so-called protective rights it held over Future Retail Ltd (FRL), the deal with FCL would not have passed muster, said two persons familiar with the matter.

Now, the CCI could revisit the order and even terminate the Amazon-FCL deal, potentially clearing the way for RIL’s purchase of Future’s retail assets, said one of the persons cited above. Both persons did not want to be identified because they didn’t want their names to appear in a ticklish case.

“This order shall stand revoked if, at any time, the information provided by the acquirer is found to be incorrect,” CCI ruled in its November 28, 2019 order clearing Amazon’s purchase of 49 percent in FCL.

In that order, the CCI made no mention of clauses that gave the American ecommerce company veto rights over FRL, though bereft of control. It assessed the presence of FRL and Amazon’s affiliates in India in the B2C retail segment and found no anti-competition concerns.

Twist In Battle

The complaint by Future is the latest twist in the battle between market leader RIL and Amazon to dominate the country’s booming retail sector. The outcome could dramatically recast the sector because of Future’s vast retail assets in hypermarkets, supermarkets and convenience stores under brand names such as Big Bazaar, Easyday, eZone, and 7-Eleven, among others.

Reuters was the first to report the CCI action after reviewing the regulator’s letter to the American ecommerce giant.

If the CCI was informed about the clauses in the Amazon-FCL contract, it could possibly not have cleared the deal or at the very least deemed it a complicated deal and delayed giving permission, according to competition lawyers Moneycontrol spoke to. They too didn’t want to be named.

CCI, Amazon, Future and RIL did not comment on this article.

Amazon said in a statement to Reuters it had received a letter, was committed to complying with India’s laws and would extend its full cooperation to the CCI. "We are confident that we will be able to address the CCI’s concerns," it told Reuters.

The letter by Future to CCI was sent a few days after a Delhi High Court order on March 18 annulled a previous court ruling that blocked FCL's deal with Amazon. The protective rights raised by Amazon featured prominently in that order by a single judge.

The judge agreed with the findings of an arbitrator that Amazon did not conceal its protective rights, but ruled that they do not amount to control of Future Retail. “This court agrees with the Emergency Arbitrator that the protective rights do not amount to control of the petitioner over FRL,” said the order.

Long-running Court Case

Amazon and Future are locked in a fierce court battle over the sale of Future Retail to RIL. Amazon alleges that Future violated their contract by selling its retail assets to RIL last year. Future says it did no wrong.

In February, Amazon filed an appeal in the Supreme Court against the order by the Delhi High Court. Arguments in the case began in India’s top court earlier this week.

Amazon has argued in courts that its 2019 deal with FCL contained clauses that prevented Future from selling retail assets to certain entities, including RIL. Future has now complained to the CCI that Amazon did not disclose these very clauses.

Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.