The Supreme Court was informed on March 15 that talks between Amazon and Future Group were not successful. The apex court is currently hearing Amazon’s plea seeking resumption of arbitration proceedings with Future group. These proceedings before the Singapore International Arbitration Centre (SIAC) governed tribunal were stayed in February by the Delhi High Court. The basis for this interim stay was the Competition Commission of India (CCI) suspending its approval for the investment deal between Amazon and Future group’s firm, Future Coupons Pvt Ltd.
The protracted legal dispute between Amazon and Future group moved into a new leg of litigation following the CCI order of December 2021 which suspended the approval for the deal in question.
Also Read | Amazon-Future: What the CCI order means for Amazon, Future group, and Reliance Industries
While Amazon challenged the stay before the Supreme Court, it also challenged the correctness of the CCI’s decision before the appellate body – the National Company Law Appellate Tribunal (NCLAT). Considering the intertwined nature of the proceedings, the apex court, in February, said that NCLAT’s decision on whether or not CCI order stands is critical for the case to proceed.
What CCI said in its order of December 2021, therefore, assumes importance in the case at this stage.
In a one-of-its-kind move, the CCI kept in abeyance its approval for the 2019 investment deal on the grounds that Amazon had not divulged its real intention with respect to the investment deal with Future Coupons.
Referring to the Amazon’s strategic interest in Future Retail’s brick and mortar retail shop chain Big Bazaar, the antitrust watchdog said that this critical information was not furnished before the regulator when Amazon sought its approval.
In its order, the CCI said that it was “a clear, conscious and willful case of omission” on Amazon’s part to disclose that its investment in a private firm of the Future group was done with the intention to secure interest in the public listed company. “The Internal Correspondence discussed above clearly demonstrates that Amazon had failed to disclose true and complete details of the purpose of the Combination,” the CCI stated in its order holding Amazon culpable of suppressing material information while seeking CCI’s approval.
As per the competition watchdog, Amazon not only suppressed the material facts but continued the misrepresentation.
“Such conducts of Amazon amount to suppression and misrepresentation,” the CCI held in its order while also imposing a fine of Rs 202 crore on Amazon.
The scheme, or combination, that the CCI refers to in its order relates to the terms in Amazon’s agreement with Future Coupons Pvt Ltd which gives Amazon the first right over Future Retail’s assets in the event India’s law governing FDI change to allow for the same. Moreover, the terms also made certain parties “prohibited” for the Future group to enter into business with. This condition precluded Future group from doing business with the Reliance group.
As per the CCI, these material facts being suppressed would amount to obtaining CCI’s approval by fraud, the order noted.
While Amazon vehemently denied any wrongdoing and claimed to have disclosed its interests adequately, the CCI kept its approval in abeyance. This move does not mean termination or revocation of the approval but its temporary suspension. The CCI gave Amazon a chance to seek fresh approval from the CCI by placing all the relevant and material on record.
Amazon, however, chose the second remedy that was available to it – challenge the CCI order.
The outcome of the fate of this CCI order will shape the way the legal dispute turns going forward.
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