The tough stance adopted last week by the Competition Commission of India while suspending the Amazon-Future Coupons deal bodes well for promoting fair competition in India by bringing to the fore the competition regulator's willingness to come down heavily on what it deems potential transgressions by any entity irrespective of size or reputation.
The order of the Competition Commission of India — which while likely to face a legal challenge from Amazon — would send out a strong signal to all organizations, big or small, that going forward, they should be more careful while presenting facts to the regulator.
In its 17 December order, CCI effectively pierced the veil created by Amazon and exposed its true intention – to get a foot in the door of multi-brand retail trade in India.
What Amazon tried to do was to get CCI to legitimise the purchase of an indirect stake in Future Retail by misleading the competition regulator. But approving foreign direct investment in multi-brand retail is the Indian government’s job and not the CCI’s.
The US e-commerce company told the regulator its rights over Future Retail were for ‘investor protection’ but internal correspondence showed that these rights were strategic in nature, effectively giving Amazon veto power.
“The Internal Correspondence of Amazon clearly highlights that the rights of Amazon over FRL are at the heart of the negotiations and the need for FRL SHA was to achieve the said objective of the Combination,” read the 17 December CCI order. FRL is Future Retail Ltd and SHA is shareholder agreement.
A mere reference to this agreement in a footnote “can, in no manner, be considered a notification of the same as a part of the Combination either in substance or form,” the order said.
Further the order said that, “the misleading submissions, false statements, omission and suppression of material particulars, facts and documents discussed above, have denied and disabled the Commission an opportunity to assess the effects of the actual Combination.”
Questions over CCI’s powers to pass this revocation order are also without merit.
The 2019 order which had given approval to the deal had clearly said that, “this order shall stand revoked if, at any time, the information provided by the Acquirer is found to be incorrect. This approval should not be construed as immunity in any manner from subsequent proceedings before the Commission for violations of other provisions of the Act.”
The CCI order thus, is a reiteration of India’s commitment to fair competition. Companies, particularly large corporate groups, would now be more cognizant of the fact that leaving gaps while disclosing information to the competition regulator could have its consequences, whether that be in terms of the regulator not providing the requisite approval or being issued show-cause notices by the CCI at some point in the future.
The Indian Sellers Collective (ISC), an organization that represents various trade associations and representative bodies of sellers, for instance, has already welcomed the CCI order on Amazon.
The CCI order would also strengthen the faith of countless ordinary citizens, including small merchants, in the architecture put in place to ensure fair competition in the Indian marketplace. The average Indian would be pleased to observe that there exists a competition regulator that would not hesitate to make the tough calls when deemed necessary, even if that process involves calling into question the actions of a global behemoth.
Another added benefit of the toughness displayed by the CCI regarding Amazon could be in terms of reaffirming the robustness of India's competition framework to prospective foreign investors. Could there be any better proof of a fearless independent competition regulator than one that does not hesitate to impose a hefty fine on Amazon?
Sumali Moitra is a current affairs commentator. Twitter: @sumalimoitra. Views are personal and do not represent the stand of this publication.
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