Amazon.com's 2019 pact with Future Group was postponed by India's antitrust commission on Friday, potentially delaying the e-commerce giant's attempts to block the sale of Future's retail assets to an Indian market leader.
The US corporation had withheld facts when seeking regulatory permission for an investment in Indian retailer Future Group two years ago, according to the regulator.
The Competition Commission of India's (CCI) decision might have far-reaching implications for Amazon's legal disputes with its now-defunct partner Future.
Amazon has been successfully using the conditions of its toehold $200 million investment in Future in 2019 to prevent the Indian retailer from selling retail assets to Reliance Industries for $3.4 billion for months.
In a 57-page order, the regulator stated that it believes "it is required to review the combination (transaction) anew," and that its approval from 2019 "must stay in abeyance" until then.
Amazon had "suppressed the actual scope"of the deal and and also put up "false and incorrect statements" while asking for approval of the deal, said the CCI's order.
"The approval is suspended. This is absolutely unprecedented," said Shweta Dubey, a partner at Indian law firm SD Partners, who was formerly a CCI official.
"The order seems to have found new power for CCI to keep the combination approval in abeyance," she added.
People familiar with the matter stated that the suspension of the antitrust approval for the 2019 Future transaction might hurt Amazon's legal position and retail ambitions, while making it simpler for Reliance - the country's largest retailer - to acquire number two player Future.
The CCI also issued a penalty of roughly 2 billion rupees ($27 million) on Amazon, stating that the corporation will be given time to resubmit material in order to obtain approvals.
Future Group, on the other hand, is unlikely to work with Amazon if it tries to reapply for antitrust clearance after the CCI's ruling, according to a source with direct knowledge.
According to the source, the Indian company plans to take CCI's Friday judgement to several court forums to argue that Amazon has no legal standing to oppose its asset sale.
A request for comment from Future and Reliance was not returned. Amazon stated that it is reviewing the order and will make a decision "in due time."
The feud over Future Retail, which has over 1,500 supermarkets and other stores, is the most acrimonious bone of contention between Jeff Bezos' Amazon and Mukesh Ambani's Reliance, as the two companies compete for retail customers.
After being hit by the COVID-19 outbreak, Future decided to sell its retail operations to Reliance for $3.4 billion last year, but Amazon successfully blocked the deal through legal hurdles.
Amazon cited Future's breach of contract, claiming that terms agreed in 2019 to pay $200 million for a 49 percent stake in Future's gift voucher unit prevented Future Group's parent, Future Retail Ltd (FRTL.NS), from selling its Future Retail Ltd (FRTL.NS) business to certain competitors, including Reliance.
The CCI investigation into the agreement began after Future, which denies any wrongdoing, reported that Amazon was making inconsistent representations about the 2019 transaction's intent before several legal venues.
The CCI informed Amazon in June that the US firm expressed interest in investing in Future's gift voucher unit in 2019 as a way to solve shortcomings in India's payments industry. However, according to the CCI, Amazon eventually revealed in various legal venues that the purpose of its investment in the Future business was to secure special rights over the retail arm, Future Retail.
(Source:www.usnews.com)
The US corporation had withheld facts when seeking regulatory permission for an investment in Indian retailer Future Group two years ago, according to the regulator.
The Competition Commission of India's (CCI) decision might have far-reaching implications for Amazon's legal disputes with its now-defunct partner Future.
Amazon has been successfully using the conditions of its toehold $200 million investment in Future in 2019 to prevent the Indian retailer from selling retail assets to Reliance Industries for $3.4 billion for months.
In a 57-page order, the regulator stated that it believes "it is required to review the combination (transaction) anew," and that its approval from 2019 "must stay in abeyance" until then.
Amazon had "suppressed the actual scope"of the deal and and also put up "false and incorrect statements" while asking for approval of the deal, said the CCI's order.
"The approval is suspended. This is absolutely unprecedented," said Shweta Dubey, a partner at Indian law firm SD Partners, who was formerly a CCI official.
"The order seems to have found new power for CCI to keep the combination approval in abeyance," she added.
People familiar with the matter stated that the suspension of the antitrust approval for the 2019 Future transaction might hurt Amazon's legal position and retail ambitions, while making it simpler for Reliance - the country's largest retailer - to acquire number two player Future.
The CCI also issued a penalty of roughly 2 billion rupees ($27 million) on Amazon, stating that the corporation will be given time to resubmit material in order to obtain approvals.
Future Group, on the other hand, is unlikely to work with Amazon if it tries to reapply for antitrust clearance after the CCI's ruling, according to a source with direct knowledge.
According to the source, the Indian company plans to take CCI's Friday judgement to several court forums to argue that Amazon has no legal standing to oppose its asset sale.
A request for comment from Future and Reliance was not returned. Amazon stated that it is reviewing the order and will make a decision "in due time."
The feud over Future Retail, which has over 1,500 supermarkets and other stores, is the most acrimonious bone of contention between Jeff Bezos' Amazon and Mukesh Ambani's Reliance, as the two companies compete for retail customers.
After being hit by the COVID-19 outbreak, Future decided to sell its retail operations to Reliance for $3.4 billion last year, but Amazon successfully blocked the deal through legal hurdles.
Amazon cited Future's breach of contract, claiming that terms agreed in 2019 to pay $200 million for a 49 percent stake in Future's gift voucher unit prevented Future Group's parent, Future Retail Ltd (FRTL.NS), from selling its Future Retail Ltd (FRTL.NS) business to certain competitors, including Reliance.
The CCI investigation into the agreement began after Future, which denies any wrongdoing, reported that Amazon was making inconsistent representations about the 2019 transaction's intent before several legal venues.
The CCI informed Amazon in June that the US firm expressed interest in investing in Future's gift voucher unit in 2019 as a way to solve shortcomings in India's payments industry. However, according to the CCI, Amazon eventually revealed in various legal venues that the purpose of its investment in the Future business was to secure special rights over the retail arm, Future Retail.
(Source:www.usnews.com)
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