In a setback for Amazon, the National Company Law Appellate Tribunal (NCLAT) on June 13 confirmed the order of Competition Commission of India (CCI) to suspend approval for the investment deal between Amazon and a Future group firm dating back to 2019.
The NCLAT has also upheld the Rs 200 crore fine imposed on Amazon and granted the company 45 days to pay. This fine is for non-disclosure of relevant information on combinations under the Competition Act, 2002.
Confirming the CCI's ruling, the NCLAT said that it is in full agreement with the anti-trust watchdog that Amazon had not made a full disclosure about its strategic interest in Future Retail Ltd - Future group's publicly listed company which ran its flagship banner of Big Bazaar.
Amazon failed to notify the relevant information pertaining to the combination of the agreements, the NCLAT said agreeing with the CCI's reasoning.
The American e-commerce giant had approached the NCLAT to challenge the CCI’s decision of December 2021 to keep its approval for the investment deal between Amazon and a Future group firm in abeyance.
CCI’s approval for investment deal of this nature or mergers and acquisition transaction is mandatory under the regulatory regime in India. Such transactions reach fruition and can be executed only after the requisite regulatory approvals from bodies such as the CCI or Securities and Exchange Board of India are received.
The Rs 1,400 crore investment deal between Amazon and Future Coupons Pvt Ltd (FCPL) had initially received all the requisite regulatory approvals facilitating the execution of the deal and transfer of the monies.
The anti-trust body’s approval was sought to be revoked later on a plea by one Future group firm after the legal tussle between the two parties broke out on the issue of Future group’s plan for an asset sale deal with a Reliance Industries’ wholly-owned subsidiary for a value of around Rs 27,000 crore.
The CCI’s order was based on its reasoning that Amazon had not disclosed its intent and strategic interests behind the deal. Denying this charge, Amazon appealed against the order before the appellate forum – NCLAT.
The deal for which the CCI kept its approval in abeyance is the same deal that provided for both the parties to approach the Singapore International Arbitration Tribunal (SIAC) for arbitration in the event of a dispute.
Amazon, in October 2020, had sought urgent hearing at SIAC to block Future group from proceeding with its proposed asset sale deal with Reliance. The tribunal, passed interim orders in October 2020 staying the said deal and decided to hear Amazon’s case on merits in detail.
Meanwhile, however, Future group moved courts in India which set the ball rolling for the protracted and multi-pronged legal battle between the two companies.
The CCI's December 2021 order became the ground for Future group to seek termination of arbitration proceedings before SIAC.
Amazon now has the legal remedy to challenge this judgment before the Supreme Court.
Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
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