In 2019, Amazon acquired a 49 percent stake in a promoter company called Future Coupons, and India’s competition regulator had approved the deal.
The Competition Commission of India (CCI) in a letter dated June 4 accused Amazon of concealing facts and making false submissions in 2019 when it sought approval for an investment in Future Coupons, Reuters reported on Wednesday.
This news comes two days after the Supreme Court began hearing arguments on the legal battle between Future Retail and Amazon. Amazon’s main argument in the case is that its 2019 deal to buy a 49% stake in Future Coupons has provisions that prevent Future Group from selling its Future Retail business to Reliance.
Read: Amazon Vs Future Retail Reaches Supreme Court, Here’s All You Need To Know About The Case
Why this matters? Both Reliance and Amazon are expanding their online and offline retail offerings to capture a larger share of India’s huge consumer base. Reliance is trying to acquire Future Retail to do this, while Amazon is trying to prevent this deal from happening. The Future vs. Amazon legal battle has been going on since October 2020 and the Supreme Court’s verdict could be the final say in who gets their way. The latest CCI accusation complicates the situation, especially Amazon’s case.
What is CCI accusing Amazon of?
CCI in a four-page letter accused Amazon of hiding its strategic interest in Future Retail when it sought approval for the 2019 deal, Reuters reported. “Amazon has concealed its strategic interest […] Such interest and the purpose of the combination … was not disclosed to the Commission despite specific requirements,” the report cited the letter as stating.
CCI also objected to another submission where Amazon told the regulator it had nothing to do with a legal agreement that Future Coupons and Future Retail signed between themselves days ahead of its 2019 deal, but Amazon later claimed before an arbitrator that the agreement was a part of the transaction, the report stated.
The letter further asks why the competition watchdog should not penalize Amazon, the report stated. CCI approval to the 2019 deal comes with a caveat that the decision “shall stand revoked if, at any time, the information provided” is found to be incorrect, the report added.
Amazon told Reuters that “it was committed to complying with India’s laws and would extend its full cooperation to the CCI.”
Why is CCI making these accusations now?
According to the letter seen by Reuters, it appears that CCI has reviewed submissions made by Amazon based on a complaint from Future Group.
CCI compared three sets of submissions Amazon made in 2019 with submissions Amazon made later to other legal forums to conclude that they were contradictory. Amazon told CCI that it was investing in Future Coupons to address gaps in India’s payment industry, but later Amazon told elsewhere that it was investing in Future Coupons for certain special rights it obtained over Future Retail, the report stated.
In the Supreme Court hearing on Tuesday, Gopal Subramanium, the senior lawyer representing Amazon, inadvertently agreed to the same when he said that Future Retail was a direct beneficiary of Amazon’s investment because the investment was to strengthen and augment the business of Future Retail.
“The representations and conduct of Amazon before the Commission amounts to misrepresentation, making false statement and suppression or/and concealment of material facts,” the Reuters report cites the letter as stating.
Future vs Amazon: Brief timeline of events
November 2019 – Amazon acquired a 49 percent stake in Future Coupons, a promoter company that owns about 7.3 percent stake in Future Retail.
August 2020 – Reliance announced that it will acquire most of Future Group’s retail, wholesale, and logistics business in a deal worth Rs 24,713 crore. Amazon objected to the Reliance deal in October saying that its agreement with Future Coupons had a non-compete-like pact and right of first refusal against deals with competitors like Reliance Retail.
October 25, 2020 – Amazon obtained an emergency arbitrator’s order against the Future-Reliance deal from a Singapore arbitration tribunal.
November 7, 2020 – Future Retail moved to Delhi High Court against Amazon and the emergency arbitrator’s order, but the court refused to interfere.
March 18, 2021 – A single judge from Delhi High Court upheld the emergency arbitration order obtained in Singapore against Future Group, putting on hold the Future-Reliance deal.
March 22, 2021 – A division bench of the Delhi High Court stayed the March 18 order. Amazon appealed to the Supreme Court against this stay.
July 20, 2021 – The Supreme Court began hearing arguments on the legal battle between Future Retail and Amazon.
A complete timeline of events can be found here.