Amazon never intended to invest in FCPL: Director of Future Retail

Amazon never intended to invest in FCPL: Director of Future Retail

Independent directors of Future Retail (FRL) have written a second letter to the Competition Commission of India (CCI), stating that US e-commerce major Amazon never intended to invest in Future Coupons (FCPL) and the US The representations made by the e-commerce player were in stark contrast and contradictory to their own internal correspondence submitted before the courts.

The directors also wrote to CCI that Amazon has obtained approval by intentionally making misrepresentation. By actively misleading the CCI and the regulator, it has to revoke the approval given for Amazon’s investment in the FCPL.

The move by independent directors of FRL comes after Amazon wrote a letter to the Securities and Exchange Board of India (SEBI) and the Ministry of Corporate Affairs, seeking permission and consent given to FRL related to the $3.4 billion merger. was asked to withdraw. Deal between Future Group and Reliance Industries This letter to CCI on behalf of independent directors has also been submitted to the exchanges.

The letter said that Amazon intends to invest directly in FRL through the Foreign Portfolio Investment (FPI) route. However, due to Amazon’s concerns arising out of Press Note 2 (PN2), the investment structure was changed and, therefore, Amazon decided that it would invest in FCPL, and that FCPL would acquire 9.82 percent of FRL.

Through PN2 in 2018, India amended its foreign direct investment (FDI) rules for e-commerce marketplaces, prohibiting companies from selling products on marketplaces with equity from the same e-commerce platform.

The independent directors of FRL stated that Amazon’s representation that it has no direct or indirect shareholding in FRL is contrary to their own internal records and that Amazon has paid a 25 percent premium on the regulatory value of FRL’s securities in exchange for strategic rights. paid to. It also said that the price paid for the FCPL shares has been determined by Amazon on the basis of the valuation of FRL as explicitly set out in the email and that there was no valuation for the business of FCPL.

The directors also point out that an email sent to Amazon’s Jeff Bezos analyzes FRL’s business and operations and has only one sentence on FCPL’s business.

The directors wrote to CCI that “despite the fact that in their mind the rights acquired by Amazon over FRL were strategic, Amazon has chosen to present these rights to CCI as ‘investment protection rights’.”

The letter also stated that Amazon’s attorneys AZB & Partners raised an issue via their email dated April 4, 2019, “to ensure that these rights are enforceable against FRL, although the Company (FCPL) It is preferred that these rights are acquired through an exclusive agreement between the Company (FCPL), the Promoters and the FRL.

The email also stated that, “the manner in which the Company exercises these rights shall be a veto matter under the FCPL Shareholder’s Agreement”.

In their earlier letter dated November 7, the independent directors of FRL had written to CCI that Amazon had violated FDI norms when it took 49 per cent stake in the company’s promoter entity – FCPL and sought CCI’s approval by suppressing facts. had applied.

Asking the CCI to rescind the approval granted to Amazon to buy a stake in FCPL, the independent directors said the CCI should act to prevent Amazon from perpetuating its “bad un-desirable design” against the Indian company. should do.

The fight between Amazon and FRL began last year after FRL merged with Reliance Retail alleging that the transaction violated its agreement with the US-based e-commerce firm. After Amazon cited its non-compete agreement with the Kishor Biyani-led chain, Amazon took the matter to the Singapore International Arbitration Center (SIAC) and a favorable decision in October last year.

In August this year, the Supreme Court (SC) ruled in favor of Amazon, implementing the SIAC award against the Future-Reliance deal in India. In September this year, in a major relief to Future Group, the Supreme Court stayed proceedings before the Delhi High Court, ordering any coercive action. The court also directed the National Company Law Tribunal, CCI and SEBI not to pass any final order regarding the dispute for four weeks.

In August 2019, Amazon acquired 49 per cent stake in FCPL – the promoter arm of FRL – for about Rs 1,500 crore.

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