Amazon drags CCI to NCLAT, challenges suspension of 2019 futures deal – World Affairs SRS

Amazon drags CCI to NCLAT, challenges suspension of 2019 futures deal

– World Affairs SRS

Amazon has filed a legal challenge in the National Company Law Appellate Tribunal (NCLAT) against the Competition Commission of India’s (CCI) suspension of the US e-commerce giant’s 2019 deal with Future Retail (FRL). Amazon has challenged the CCI order on at least five grounds, and the matter is likely to be listed this week, according to sources.

In December last year, CCI suspended Amazon’s 2019 Rs 1,500-crore deal with Future Retail (FRL), citing the company’s alleged intentional design to suppress information about the scope and purpose of the deal. Was. The antitrust regulator imposed a fine of Rs 200 crore on Amazon within 60 days of receiving the order. In its 57-page order, the competition watchdog said it considers it necessary to re-examine the combination, noting that both players were well-known in online marketplaces and offline retailing and considering the strategic alignment between their businesses. Were. It had said that the CCI approval granted in 2019 for the intervening period ‘will remain in abeyance’.

However, according to people familiar with Amazon’s strategy, when the firm submitted the document to the CCI, it clearly mentioned that the company’s investment in Future Coupons was a strategic investment as the government would at some point invest in multi-brand retail. may allow. sector in the country. Amazon’s legal team is expected to argue that there was no misrepresentation of facts and that all information was clearly stated.

“CCI does not have the authority to terminate the approval of the deal after 12 months. ‘Suspension’ will not apply. The CCI had to either approve or cancel the deal within 12 months,” said a person familiar with Amazon’s strategy. “Moreover, it would be argued that the CCI had said all the information was there but that Amazon should have pointed out the FRL emphatically.”

A query sent to Amazon regarding this development remained unanswered till it went to press.

The person familiar with Amazon’s strategy said, “It would also be argued that Future Coupons, which was a joint applicant and a beneficiary Post receiving funds from Amazon, is now a complainant and the deal that received the money and used it would be closed.” seeking cancellation.”

The issue dates back to August 2019, when Amazon acquired 49 per cent stake in Future Coupons, the promoter arm of FRL (Future Retail), for about Rs 1,500 crore. A year later, in August 2020, Future Group inked a $3.4 billion asset-sale deal with Reliance Industries (RIL).

In October 2020, Amazon sent a legal notice to Future for signing a deal with RIL. It alleged that Future’s $3.4 billion asset sale deal with RIL violated an agreement with Amazon. It cited its non-compete agreement with the Kishor Biyani-led series. This deal specifies that any dispute shall be arbitrated under Singapore International Arbitration Center (SIAC) rules. That same month, in October 2020, Amazon received a favorable ruling for its petition at SIAC against the deal.

In November 2020, Future moved the Delhi High Court (HC) against Amazon, alleging interference by the US firm in the deal with RIL. Since then, Amazon has been fighting a legal battle with FRL to block Future’s $3.4 billion deal with RIL.

In August last year, the Supreme Court (SC) had ruled in favor of Amazon while upholding Singapore’s emergency arbitral award against a Future-Reliance deal enforceable in India. But in a major relief to Future Group, the Supreme Court in September last year stayed the proceedings before the Delhi HC, ordering no coercive action. The court also directed the National Company Law Tribunal, CCI and Securities and Exchange Board of India not to pass any final order regarding the dispute for four weeks.

In November last year, the SC extended by two weeks the time given by the Delhi HC to the CCI to decide with regard to the show cause notices issued to Amazon on the deal with Future Group.

However, this year, the Delhi High Court (HC) stayed the arbitration proceedings regarding Future Group’s 2019 deal with Amazon before the Singapore Tribunal on Wednesday. This is a big relief for Kishore Biyani and his retail group Future. A division bench also stayed the single judge’s order, which had refused to interfere in the matter on Tuesday while dismissing the petitions filed by two subsidiaries of Future Group. The single judge of the HC had refused to interfere in the ongoing arbitration proceedings before the Singapore International Arbitration Center (SIAC).

However, legal experts said the order has created a ‘conflict of laws’ situation, defeats the sole crux of the contractual arrangement, and may prevent foreign companies from entering the Indian market.

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