This comes amidst a bitter legal battle between Amazon and Future Group over the latter's proposed ₹ 24,713 cr deal with Reliance Retail.
The Competition Commission of India (CCI) suspended its approval for Amazon's deal to acquire a stake in retailer Future Coupons Pvt. Ltd. and imposed a Rs. 202 cr penalty for hiding facts and making false statements while seeking regulatory approvals in 2019.
The Amazon-Future Coupons deal approval shall be kept in abeyance.
The 10-point Cheat Sheet to this Big Story
1. Amazon suppressed the actual scope of the deal and made false statements while seeking approvals to invest in Future Group. CCI considers it necessary to examine the deal afresh.
2. This comes amidst a bitter legal battle between Amazon and Future Group over the latter's proposed Rs. 24,713 cr deal with Reliance Retail - the country's largest retailer in terms of revenue.
3. In 2019, Amazon had entered into a deal worth Rs. 2,000 cr with Future Group. As part of the deal, Amazon had acquired 49 per cent stake in Future Coupons - the promoter firm of listed Future Retail - which also owns 7.3 per cent equity in Future Retail through convertible warrants.
4. Future Retail would be able to place its products on Amazon's online marketplace. Additionally, Amazon had the right to buy into the flagship Future Retail after 3-10 years.
5. In August 2020, Reliance Retail Ventures said that it will acquire the retail and wholesale business, and the logistics and warehousing business of Future Group for Rs. 24,713 cr.
6. Amazon objected to Future's deal with Reliance, saying that it was a violation of a non-compete clause and a right-of-first-refusal pact it had signed with Future. The terms agreed in its 2019 deal of buying the 49 per cent stake in Future's gift voucher unit prevents the parent company - Future Group, from selling its Future Retail business to certain rivals, including Reliance.
7. Future Group complained to the antitrust body that Amazon had concealed facts over their deal. In June, the CCI sought an explanation from Amazon saying it hid factual aspects of the transaction by not revealing its strategic interest in Future Retail while seeking approvals.
8. While approving the deal in November 2019, CCI had also mentioned that the order shall stand revoked if, at any time, the information provided by the acquirer was found to be incorrect.
9. Earlier this week, Amazon had warned the antitrust body that revoking its 2019 deal with the Future Group would send a negative signal to foreign investors and allow Reliance to further restrict competition.
10. The CCI order will potentially dent Amazon's attempts to block the sale of Future's retail assets to Reliance Retail. The ruling could also have far-reaching consequences for Amazon's legal battles with Future.
To be continued
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