What was the deal
Amazon purchased 49 % stake (worth Rs 200 crore) of Future Coupons, a payments
provider that distributes gift cards and other products, in 2019. Amazon was
named sole e-commerce provider for various Future Group brands as a result of
the transaction, which was considered as a method for Amazon to build a foothold
in India's retail business. Reliance Retail Ventures announced in August 2020
that it will buy Future Group's retail and wholesale businesses, as well as its
logistics and storage businesses, for Rs 24,713 crore.
Thereafter, Future Group agreed to sell its retail and wholesale operations to
rival Reliance, Amazon objected, claiming that it violated a non-compete clause
and a right-of-first-refusal agreement the two companies had signed. Amazon also
claimed that the conditions of its 2019 arrangement to buy a 49 % share in
Future's gift voucher subsidiary preclude the parent firm, Future Group, from
selling its Future Retail division to competitors such as Reliance.
complaint against Future Group in relation to the 2019 purchase was being heard
by a Singapore arbitration tribunal. The tribunal had issued an interim order
halting the sale of Future Retail's assets to Reliance Industries to prevent Mukesh Ambani from using Future to expand his JioMart venture, which delivers
daily essentials through a vast network of mom-and-pop shops.
What is the dispute
While approving the purchase in November 2019, the Competition Commission
additionally stated that the order will be withdrawn if the acquirer's
information was discovered to be false at any moment. According to news agency
Reuters, Amazon warned the antitrust commission earlier this week that
cancelling its 2019 deal with the Future Group would send a negative signal to
international investors and allow Reliance to "further restrict competition."
The CCI had put the agreement on hold because Amazon had failed to notify it of
some key elements of the acquisition, as required by Section 6(2) of the
Competition Act of 2002. (Act). As a result, Amazon was also hit with a Rs 202
Future Group subsequently sought the Delhi High Court, citing the CCI judgement,
to request a halt on the arbitration proceedings at the tribunal. According to
the pleas, the agreement between the two companies is no longer valid because
the CCI has suspended its approval, and thus the arbitration based on the
agreement is likewise invalid.
Amazon has filed a complaint with the National Company Law Appellate Tribunal (NCLAT)
disputing the Competition Commission of India's (CCI) order suspending its 2019
arrangement with the Future Group.
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