Amazon Future deal
CCI cancels Amazon-Future deal
New Delhi/IBNS: Amazon suffered a setback Friday as the Competition Commission of India (CCI) suspended its deal with Future Group after reviewing complaints that US-based e-commerce giant concealed information while seeking regulatory approval, media reports said.
In a 57-page order, India’s anti-trust regulator said Amazon suppressed “the actual purpose and particulars” of the 2019 deal and sought to “establish false representation and suppression of material facts”.
The complainants - Future Coupons Private Ltd (FPCL) and the Confederation of All India Traders (CAIT) accused that Amazon did not disclose its intent to indirectly control the parent firm, Future Retail Ltd, through its acquisition of 49 percent stake in FPCL.
CCI said it was now “necessary to examine” the deal afresh and said its approval "shall remain in abeyance" until then.
"Amazon had suppressed the actual scope of the Combination and had made false and incorrect statements" in relation to the commercial agreement, "which are intertwined into the scope and purpose of the Combination," the CCI order said.
On Thursday, Amazon reportedly argued before CCI that it is not the competent authority to cancel a deal to which clearance has already been issued. "The power to revoke an approval is a drastic power and is not available to a statutory authority unless expressly provided" in Indian law, Reuters had quoted the company as saying.
Rejecting Amazon’s argument, CAIT said, “The company should not have participated in any of the CCI proceedings "if it believes the agency does not have the power to revoke a deal.”
The traders’ body also read excerpts from an email purportedly sent by top Amazon executive Rakesh Bakshi to Amazon chief executive officer Jeff Bezos.
The email, according to CAIT, does not say a word about FCPL’s business, arguing that it reveals Amazon's intent to indirectly control Future Retail.
Amazon and Future Group have been entangled in a bitter legal battle in Indian courts after Future agreed to sell its assets to Mukesh Ambani's Reliance Group on a slump basis for Rs 24,500 crore last year.
Amazon alleges that Future violated their contract—a $200 million investment in 2019—by selling its retail assets to RIL last year. Future denies the allegations.
Last month, independent directors of FRL had also alleged that Amazon had misled CCI.
Amazon changed its plans after the government released Press Note 2 rules which tightened rules for foreign e-commerce entities operating in India.
They also accused that Amazon’s intention to invest in Future Coupons Pvt Ltd (FCPL) was never a “unique business model and strong growth potential”, which Amazon had mentioned to the competition regulator.
After examining the pre-contractual negotiation records of Amazon's investment in FCPL, the independent directors found that the representations made by Amazon in its CCI application “completely contradict internal correspondences”, said the Money Control report.
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