India intimidates Amazon by suspending 2019 2019 Future Group deal, cites suppression of information


  • The Amazon 2019 Future deal was at the heart of ongoing legal disputes
  • India’s watchdog is suspending the deal, Amazon said suppressed information in 2019
  • Amazon must pay a fine of 2 billion rupees watchdog
  • Suspension of agreement latest legal twist in Future-Amazon saga

NEW DELHI, December 17 (Reuters) – India’s antitrust agency suspends Amazon.com (AMZN.O) 2019 deal with Future Group on Friday, which could potentially hamper the US e-commerce giant’s attempt to block the sale of Future’s retail assets to an Indian market leader.

The regulator ruled that the US company had suppressed information while seeking regulatory approval for an investment in Indian retailer Future Group two years ago.

The ruling by the Indian Competition Commission (CCI) could have far-reaching consequences for Amazon’s legal battles with the now alienated partner Future.

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For several months, Amazon has successfully used the terms of its $ 200 million investment in Future in 2019 to block the Indian retailer’s attempt to sell retail assets to Reliance Industries (RELI.NS) for $ 3.4 billion.

The regulator’s 57-page order said it considers it “necessary to re-examine the combination (agreement),” adding that its 2019 approval “should remain in place” until then.

The CCI’s order said Amazon had “suppressed the actual scope” of the agreement and had made “false and incorrect statements” while seeking approvals.

“The approval has been suspended. This is completely unprecedented,” said Shweta Dubey, a partner at Indian law firm SD Partners, a former CCI official.

“The order appears to have found new power for CCI to hold the combination approval pending,” she added.

With the 2019 Future Antitrust approval now suspended, it could affect Amazon’s legal position and retail ambitions, while making it easier for Reliance – the country’s largest retailer – to acquire number two player Future, people familiar with the dispute said.

CCI also imposed a fine of about $ 2 billion ($ 27 million) on the U.S. company, adding that Amazon will have time to resubmit information to seek approvals, CCI added.

However, it is unlikely that Future Group will cooperate with Amazon if it tries to apply for antitrust approval again after CCI’s decision, a source with direct knowledge told Reuters.

The Indian company is also set to take CCI’s Friday decision before various legal forums to argue that Amazon has no legal basis to contest its asset sale, the source added.

Future and Reliance did not respond to a request for comment. Amazon said it is reviewing the order “and will decide on its next move in due course.”

DETAIL BATTLE

The dispute over Future Retail, which has more than 1,500 supermarkets and other outlets, is the most hostile hotspot between Jeff Bezos’ Amazon and Reliance, driven by India’s richest man Mukesh Ambani as they try to gain the upper hand in winning retail consumers.

Hit by the COVID-19 pandemic, Future decided last year to sell its retail assets to Reliance for $ 3.4 billion, but Amazon managed to successfully block the sale through legal challenges.

Amazon cited Futures ‘breach of contract, claiming that terms agreed in 2019 to pay $ 200 million for a 49% stake in Futures’ gift card unit prevented its parent company, Future Group, from selling its Future Retail Ltd. (FRTL.NS) business to certain rivals, including Reliance.

The CCI review of the deal started after Future, which denies any wrongdoing, complained, saying that Amazon made conflicting statements to various legal forums about the intent of the 2019 transaction.

In June became That’s what CCI told Amazon the US company in 2019 explained its interest in investing in Futures gift card unit as one that would remedy gaps in India’s payment industry. But later, CCI said, Amazon revealed in other legal forums that the basis for its investment in the Future unit was to acquire special rights over the retail trade, Future Retail.

In Friday’s order, the CCI said there was “a deliberate design on Amazon’s part to suppress the actual scope and purpose of the agreement”.

Prior to CCI’s decision, Amazon refused to hide any information and warned the watchdog that Futures’ bid to wind down the 2019 deal to allow Reliance to consolidate its position “will further restrict competition in the Indian retail market”.

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Reporting by Aditya Kalra in New Delhi; Edited by Euan Rocha, Jane Merriman and Louise Heavens

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