Menu
BW CFO World
Community for Finance Professionals, Consultants and allied businesses
  • Home
  • News
  • Videos
  • Articles
    • Credit & Capital
    • Economic Trends
    • Financial Compliance
    • Financial Leadership
    • Financial Management
    • Financial Reporting
    • Financial Strategy
    • Risk Management
    • Taxation
  • Featured
  • Nominate for Awards
Close Menu
law
December 20, 2021

Amazon-Future Deal Suspended, Rs. 200 Crore Fine Slapped By Competition Commission Of India

Urvi Srivastava Economic Trends, Financial Reporting amazon, competition commision of india, deal, Future Group

CCI that had approved the investment in 2019 said Amazon “suppressed the actual scope” of the deal and had made “false and incorrect statements”.

India’s antitrust agency suspended Amazon.com’s 2019 deal with Future Group on Friday, potentially denting the US e-commerce giant’s attempts 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 on investment into Indian retailer Future Group two years ago.

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

Amazon has for months successfully used the terms of its toehold $200 million (roughly Rs. 1,500 crores) investment in Future in 2019 to block the Indian retailer’s attempt to sell retail assets to Reliance Industries for $3.4 billion (roughly Rs. 25,950 crores).

The regulator’s 57-page order said it considers “it necessary to examine the combination (deal) afresh,” adding its approval from 2019 “shall remain in abeyance” until then.

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

“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.

With the 2019 Future deal’s antitrust approval now suspended, it could dent 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.

The CCI also imposed a penalty of around Rs. 200 crores ($27 million) on the US company, adding that Amazon will be given time to submit the information again to seek approvals, the CCI added.

Future Group, however, is unlikely to cooperate with Amazon if it tries to reapply for antitrust clearance after the 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 challenge 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 steps in due course.”

Retail battle
The dispute over Future Retail, which has more than 1,500 supermarkets and other outlets, is the most hostile flashpoint between Jeff Bezos’ Amazon and Reliance, run 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 last year decided to sell its retail assets to Reliance for $3.4 billion, but Amazon managed to block the sale successfully through legal challenges.

Amazon cited breach of contracts by Future, arguing that terms agreed in 2019 to pay $200 million for a 49 percent stake in Future’s gift voucher unit prevented its parent, Future Group, from selling its Future Retail business to certain rivals, including Reliance.

The CCI review of the deal started after Future, which denies any wrongdoing, complained, saying that Amazon was making contradictory statements before different legal forums about the intent of the 2019 transaction.

In June, the CCI told Amazon the US firm in 2019 explained its interest in investing in Future’s gift voucher unit as one that would address gaps in India’s payments industry. But later, the CCI said, Amazon disclosed in other legal forums the foundation of its investment in the Future unit was to obtain special rights over the retail arm, Future Retail.

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

Ahead of CCI’s decision, Amazon denied concealing any information and warned the watchdog that Future’s bid to unwind the 2019 deal to allow Reliance to consolidate its position “will further restrict competition in the Indian retail market”.

(Reuters)

Urvi Shrivastav

→ Urvi Shrivastav

ONGC Scripts Sharp Turnaround Of Subsidiaries, Opal Reports First Profit Tata Realty To Invest Rs 5,000 Cr To Build IT Park Project In Navi Mumbai

Related Posts

start-up

Credit & Capital, Economic Trends

Cash-strapped Pak Secures Deal With IMF To Restore Stalled USD 6 Bn Aid

indian rupee

Credit & Capital, Economic Trends

Investors richer by over Rs 5.77 lakh cr as markets rally

20211208_135038

Credit & Capital, Economic Trends

Mutual Funds Can Resume Investing In International Stocks: Sebi

Movements

  • adobe danDan Durn Appointed As Adobe’s New Chief Financial Officer
  • Vineet Mahajan_Vineet Mahajan Appointed As New CFO Of Avanse Financial Services On Sept 27
  • bharat pet director financeVetsa Ramakrishna Gupta To Lead Bharat Petroleum As Director Finance
  • tender cuts cfoTenderCuts Names Satya Rakesh as New CFO
  • dailmer CFOManish Thakore Helms Daimler India Commercial Vehicles as CFO

Selected Stories

  • start-upCash-strapped Pak Secures Deal With IMF To Restore Stalled USD 6 Bn Aid

    Read more

  • sahil-vaidya-imageOMTV Appoints Sahil Kiran Vaidya As Head Of Business And Strategy

    Read more

  • indian rupeeInvestors richer by over Rs 5.77 lakh cr as markets rally

    Read more

  • 20211208_135038Mutual Funds Can Resume Investing In International Stocks: Sebi

    Read more

  • green energyIndia Needs $223 Bn To Meet 2030 Renewable Capacity Goals: Report

    Read more

Categories

  • Accounting
  • CFO Stance
  • Credit & Capital
  • Economic Trends
  • Featured
  • Financial Compliance
  • Financial Leadership
  • Financial Management
  • Financial Reporting
  • Financial Strategy
  • Financial Technologies
  • Global News
  • Interview
  • Movements
  • Risk Management
  • Taxation

Recent Comments

    Back To Top
    BW CFO World
    • Home
    • News
    • Videos
    • Articles
      • Credit & Capital
      • Economic Trends
      • Financial Compliance
      • Financial Leadership
      • Financial Management
      • Financial Reporting
      • Financial Strategy
      • Risk Management
      • Taxation
    • Featured
    • Nominate for Awards
    © Copyright BW BUSINESSWORLD 2018. All Rights Reserved.