Washington: The Competition Commission of India (CCI) on Friday suspended its more than two-year-old approval for Amazon’s deal to acquire stake in retailer Future Coupons Private Limited and also imposed a ₹ 202 crore penalty on the e-commerce major for hiding facts and making false statements while seeking regulatory approvals in 2019.
In a 57-page order, the country’s antitrust body said the approval for the Amazon-Future Coupons deal “shall remain in abeyance”.
The regulator said Amazon had “suppressed the actual scope” of the deal and had made “false and incorrect statements” while seeking approvals to invest in Future Group two years ago, adding that it considers “it necessary to examine the combination (deal) afresh.”
The development comes amid a bitter legal battle between Amazon and Future Group over the latter’s proposed ₹ 24,713 crore-deal with billionaire Mukesh Ambani-led Reliance Retail Ventures – the country’s largest retailer in terms of revenue.
In 2019, Amazon had entered into a deal worth ₹ 2,000 crore with Future Group. As part of the deal, Amazon had acquired 49 per cent stake in Future Coupons – the promoter firm of Future Retail – which also owns 7.3 per cent equity in listed Future Retail through convertible warrants.
As part of the deal between Amazon and Future Coupons, Future Retail would be able to place its products on Amazon’s online marketplace. Additionally, Amazon had the right to buy into the flagship Future Retail after three to 10 years.
In August 2020, Reliance Retail Ventures said that it will acquire the retail and wholesale business, and the logistics and warehousing business of Future Group for ₹ 24,713 crore.
Amazon objected to Future’s deal with Reliance, saying that it was a violation of a non-compete clause and a right-of-first-refusal pact it had signed with Future.
The e-commerce giant also argued that terms agreed in its 2019 deal of buying the 49 per cent stake in Future’s gift voucher unit prevents the parent company – Future Group, from selling its Future Retail business to certain rivals, including Reliance.
Future Group complained to the antitrust body that Amazon had concealed facts over their deal. In June, the CCI sought an explanation from Amazon saying it hid factual aspects of the transaction by not revealing its strategic interest in Future Retail while seeking approvals.
While approving the deal in November 2019, the Competition Commission had also mentioned that the order shall stand revoked if, at any time, the information provided by the acquirer was found to be incorrect.
Earlier this week, Amazon had warned the antitrust body that revoking its 2019 deal with the Future Group would send a negative signal to foreign investors and allow Reliance to “further restrict competition”, according to news agency Reuters.
Friday’s CCI order will potentially dent Amazon’s attempts to block the sale of Future’s retail assets to Reliance Retail. The ruling could also have far-reaching consequences for Amazon’s legal battles with Future.