
The decision of the Competition Commission of India (CCI) to suspend the original transaction between Amazon and the Kishore Biyani-promoted Future Coupons Private Limited (FCPL) has quite easily added another dimension to an already complicated issue. It was in 2019 when Amazon acquired a 49 per cent stake for a sum of Rs 1,500 crore. It gave the e-tailer an indirect 3.58 holding in Biyani’s flagship, Future Retail. Simple you might think but not really for the CCI, who thought otherwise. To cut a long story short, the already fractured relationship between the two parties has hit a new low, with only one more legal twist in the case.
According to Arush Khanna, Partner, Numen Law Offices, "this is the first instance wherein the CCI has revoked an approval previously granted by it.” The rub is about the original order passed two years ago. “It stated that if the information provided by Amazon was found to be incorrect, the approval so granted may be revoked. The CCI has made scathing observations to the effect that Amazon’s pursuit to obtain CCI’s nod for acquiring stakes in Future Coupons Limited was based on concealment and misrepresentation,” he says.
Understandably, this is a huge embarrassment to Amazon. There is nothing to say the order cannot be challenged but it comes with more delay. The genesis to this deal was the proposed acquisition of Biyani’s businesses by Mukesh Ambani’s Reliance Retail. Amazon saw red and objected to this. It was in November that Amazon’s intention to acquire Future Retail was made evident.
Where does all this leave Amazon? Avanti T. Chandele, Partner, Mind Legal, explains that the CCI, through the judgement, “has directed Amazon to examine the combination afresh and notify the CCI within the period of 60 days.” This will be with “true, correct, and complete information’” under section 45(2) of the Act along with imposing a penalty of Rs 202 crore on the e-commerce behemoth.
“Further, the regulatory body via this order also allowed third parties like the Confederation of All Indian Traders (CAIT) to reaffirm their allegations of malpractices towards Amazon,” she adds.
The options left are to challenge the revocation order before the National Company Law Appellate Tribunal (NCLAT). According to Khanna, this proposed appeal is expected to raise important questions relating to the powers of statutory authorities. “Unless this revocation is stayed or set aside by the NCLAT, it is certain to dampen Amazon’s prospects before the arbitral tribunal where it is resisting the acquisition of Future Retail Limited by Reliance Retail,” he says.
Obviously, the issue is clearly reaching boiling point and Chandele maintains that Amazon’s deal with Coupons allowed the e-tailer to enjoy its investment rights in Future group. “It made it difficult for Future Group to sell its assets. But with CCI putting in abeyance the 2019 order, it may pave the way for Reliance to acquire the group since all approvals relating to the investment made by Amazon in Future Coupons have been put on hold,” she says.
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