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Sebi may rebuff Amazon on Future-Reliance deal

The regulator is unlikely to pay heed to Singapore arbitrator’s interim ruling holding up the deal between Indian companies,

November 12, 2020 / 10:50 PM IST

Stock market regulator Securities and Exchange Board of India is likely to rebuff Amazon and decline to become embroiled in the American company’s dispute with Future group over the sale of the latter’s assets to Reliance Retail, people aware of the development tell Moneycontrol.

“Amazon can settle the commercial aspects in designated courts rather than have Sebi enforce the contract,” a source said on condition of anonymity. “It does not come under securities law.”

A refusal by Sebi to involve itself in the commercial aspects of the Rs 24,713-crore deal in August this year between Future group and Reliance Retail signals that the regulator will not be paying heed to a Singapore arbitrator’s emergency interim ruling putting the Future-Reliance transaction on hold.

Also Read: Opinion | Why is Amazon pushing hard to stop the Reliance-Future deal?

Amazon, which in August 2019 acquired an indirect stake of nearly 5 percent in listed Future Retail by investing Rs 1,500 crore in an unlisted entity called Future Coupons, informed Sebi last month of the ruling by the Singapore International Arbitration Centre. Future Retail, which operates the Big Bazaar, Easy Day and Nilgris chain of supermarkets, has moved the Delhi High Court seeking to stop Amazon from interfering with the sale of its assets to Reliance.


Senior Advocate Harish Salve, appearing for Future Retail, told the high court that Amazon is playing dog in the manger by trying to block Reliance from acquiring the assets of the troubled Future in a slump sale. “Please don’t allow this American giant to kill Future Group only to further its illegitimate interest to make sure that Reliance does not get its hands in. That’s its game plan—if I can’t get it, let Reliance not get it too,” he argued on Tuesday.

Amazon is also under pressure for alleged violations from other quarters in India and overseas. The Confederation of All-India Traders, the apex grouping of traders’ groups, has written to the commerce minister that Amazon is violating Foreign Direct Investment policy for multi-brand retail. In the case of Future, CAIT alleges that the US giant has secured a controlling say in Future Retail through its investment in Future Coupons. Amazon denies the charge. In the US and the European Union, regulators are investigating Amazon’s treatment of third-party merchants and its use of seller data to compete against them.

Also Read: 10 things we learned about Future Retail’s POV in its M&A spat with Amazon

Another source told Moneycontrol that in the case of the scheme of arrangement between the Future group and Reliance Retail, there is a standard procedure to assess it. “Designated exchanges submit their report to Sebi and the regulator takes a view on the basis of the exchanges’ report. A similar procedure continues in this case also.”

Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd which publishes Moneycontrol.
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first published: Nov 12, 2020 06:18 pm
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