Understanding Amazon-Reliance-Future Group Case as CCI approved the latter’s acquisition

By : |November 23, 2020 0

Mukesh Ambani’s Reliance Industries in August announced the acquisition of businesses of Kishore Biyani’s Future Group for ₹24,713 crores. It would add to its fast-expanding retail business and bolster the e-commerce segment. But this put Flipkart and Amazon in a great fix in the Indian Market. This was an even more problematic area for Amazon, as the latter has invested in Future Group. It picked up a 1.3 per cent stake in Future Retail last year through Future Coupons, in which it bought a 49 per cent stake.

Amazon filed a suit alleging that Future Group had engaged in insider trading and violated contracts. Amazon has argued that its contract with Future Coupons, one of Future Group’s holding companies, prohibited the Indian group from selling its assets to a competing firm like Reliance Retail. Also, Amazon added that Future Group cannot sell any shares of FRL to Reliance or any other competitor apart from the US company as it has the right of first refusal.

Then, Amazon reached out to the Singapore International Arbitration Centre to block the deal. In fact, if the deal was approved, it could emerge as the largest retail deal in India. But, in October, the SIAC issued an order to temporarily halt the deal between the two Indian retail giants. Now, how much does the order hold up in India was always a question.

The case stayed with CCI for 2 long months.

As Amazon won a small victory when the injunction stopped the deal, CCI took over. It anyways had to go through for approvals from CCI, the Securities and Exchange Board of India (SEBI) and the National Company Law Tribunal (NCLT). Additionally, it had to obtain no-objection certificates from creditors and minority shareholders. Reliance had sought the CCI’s nod for the deal on September 23.

Further, Future Group, too, took the matter to the Delhi High Court alleging that SIAC order was not binding and enforceable in India. To this, Amazon stated that CCI’s assessment was different from SIAC and even DHC. So, the case should still see that Amazon was not affected adversely with the deal.

On 20th November, CCI cleared the deal. A spokesperson said, “Based on the retail assessment framework, the commission’s finding is that the deal does not have an appreciable adverse effect on competition.”

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