NCLAT agrees to hear Amazon’s appeal against CCI, but grants no interim relief

CCI had found that Amazon had withheld certain necessary information concerning Amazon’s strategic interest in Future Retail.

While arguing the case before the NCLAT today, Amazon challenged the CCI order and said that a twin entity investment structure was adopted by Amazon and Future group owing to the existing laws in India concerning Foreign Direct Investment in multi-brand retail. The share-subscription agreement makes it clear that Amazon would invest Rs 1,431 crore in Future Coupons Pvt Ltd which would be directly transmitted to Future Retail Ltd. This information and arrangement were disclosed to the CCI, Amazon’s counsel told the NCLAT.

The arrangement gave certain protective rights to Amazon and also a call option to make a direct investment in Future Retail should the Indian law on FDI change, the appellate tribunal was told. Senior Advocate Gopal Subramanium, representing Amazon, said that the agreement made it clear that Future Retail would not alienate its assets or deal with certain restricted parties which included Reliance Industries. With Future Retail announcing an asset sale deal to a Reliance firm, the contractual obligations are breached, Amazon argued.

The commission’s December 2021 order came after it was Kishore Biyani’s Future Coupons itself that sought for the reconsideration for the CCI approval. This plea by the Future group firm also found support from certain independent directors of Future Retail as well as the Confederation of All India Traders.

The commission did not quash the approval it had granted, but kept it in abeyance and granted time to Amazon to seek approval once again.

While Amazon claims no wrong-doing in securing CCI approval for the 2019 deal, and filed an appeal against CCI’s ruling, Future group sought for the arbitration proceedings between the two giants to be terminated and approached the Delhi High Court for this

Before the NCLAT, Amazon argued that the Future group approached the CCI with a complaint after it feared losing in the arbitration proceedings.

In a major relief for Future group, the Delhi High Court, earlier this month, stayed the arbitration proceedings citing the CCI order stating that the balance of convenience leans in favour of Kishore Biyani’s group companies in light of the CCI order. The stay order has been challenged before the Supreme Court while a separate appeal against the CCI order came before the NCLAT where Amazon cited the development as reason for urgency in hearing the appeal.

The legal battle between Amazon and Future began back in 2020 when Amazon invoked arbitration after Future Retail announced its asset sale deal with Reliance Industries Ltd’s wholly owned subsidiary, Reliance Retail. Amazon claimed that its deal with Future Coupons prevented Future Retail also, in capacity of related party, from entering into agreements with certain entities including the Mukesh Dhirubhai Ambani group. Future Retail claimed that it was not bound by the deal between Amazon and Future Retail’s promoter firm.

The asset sale deal between India’s two leading retailers was stayed by an emergency arbitrator in October 2020 and the validity of this order was finally affirmed by the Supreme Court in August 2021. While this merger remains stayed, Future group firm moved CCI accusing Amazon of withholding pertinent information leading to the CCI order of December which has now become basis for a fresh round of litigation.

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