Amazon says India revoking Future deal would boost Reliance, hurt competition

Future Enterprises

14/12/2021 14:53

* Amazon-Future locked in legal disputes for more than a
year
    * Amazon says sentiment will be hit if 2019 Future deal
revoked
    * Amazon argues India watchdog has no power to revoke deal
    * Future-Reliance deal would "further restrict competition"
-Amazon

    By Aditya Kalra
    NEW DELHI, Dec 14 (Reuters) - Amazon has warned India's
antitrust body that revoking its 2019 deal with Future Group
would send a negative signal to foreign investors and allow
local retail behemoth Reliance to "further restrict
competition", a legal document seen by Reuters showed.
    The Competition Commission of India (CCI) in reviewing its
prior approval of the $200 million investment the U.S. company
made in a Future unit in 2019, amid allegations that Amazon
concealed facts http://reut.rs/3I1MJ4r when it sought approval
for the transaction. 
    The CCI's review was triggered after a complaint from
Amazon's now estranged partner Future. The two sides have been
at loggerheads since last year with the U.S. company
successfully using the terms of its toehold investment in 2019
to block debt-laden Future's https://reut.rs/3BV0tJG attempt to
sell retail assets to Reliance Industries  RELI.NS  for $3.4
billion. 
    While Future is staring at liquidation, the legitimacy of
the small $200 million deal could have far-reaching consequences
for India's retail sector.     
    If Amazon prevails, it will slow Reliance's plan to acquire
Future at a time when it is already rapidly expanding into
e-commerce. 
    And if the 2019 deal is voided, it could make it easier for
Reliance to close the Future deal, hurting Amazon's retail
ambitions, people familiar with the dispute say.   
    Amazon in a confidential filing on Dec. 12 said CCI's
approval revocation is "bound to send a message to foreign
investors that the economy and regulatory landscape of India are
still not developed enough to provide stability and certainty to
foreign investments".
    Amazon in its 60-page submission went on to say Future's aim
"to unwind the investment" to allow Reliance to consolidate its
position "will further restrict competition in the Indian retail
market".
    The bruising public battle https://www.reuters.com/article/amazon-india-future-reliance-idUSKBN2871AM
 over Future Retail pits Jeff Bezos' Amazon against Reliance,
run by one of India's richest men, Mukesh Ambani, in a bid for
retail dominance in India.
    Reliance is India's No. 1 retailer with more than 13,000
outlets, and rapidly expanding into e-commerce.
    Future Retail ranks second with more than 1,500 outlets.
    Amazon, Reliance and Future did not respond to a request for
comment. The CCI also did not respond.
    
    NO INFO CONCEALED, CCI HAS 'NO POWER' 
    The Future-Reliance deal has been on hold as Amazon got
favourable interim rulings from a Singapore arbitrator and
Indian courts. Future denies any wrongdoing, and the dispute
continues to be heard in multiple forums.
    Amazon has argued that terms agreed upon in its 2019 deal to
pay $200 million for a 49% stake in Future's gift voucher unit
prevent its parent, Future Group, from selling its Future Retail
Ltd  FRTL.NS  business to certain rivals, including Reliance.
    In June, the CCI sought explanation http://reut.rs/3I1MJ4r
from Amazon saying it hid factual aspects of the transaction by
not revealing its strategic interest in Future Retail while
seeking approvals.
    In its Dec. 12 response to the CCI - being reported here for
the first time - Amazon argues no information was concealed from
the CCI and lawyers representing the Future Group "had vetted
and approved" all submissions.
    "There was no concealment of any material information,"
Amazon's filing states. 
    The CCI's 2019 approval order states its decision "shall
stand revoked if, at any time, the information provided" is
found to be incorrect. 
    But Amazon in its submission argues the CCI has no power to
do so, saying its approval order as per Indian laws is a final
one, not conditional.
    "The power to revoke an approval is a drastic power and is
not available to a statutory authority unless expressly
provided" in Indian law, Amazon argued.

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Analysis: Battle of the billionaires - Bezos, Ambani gun for
India retail supremacy    https://www.reuters.com/article/amazon-india-future-reliance-idUSKBN2871AM
EXCLUSIVE-Indian agency seeks documents from Future on disputed
Amazon deal     urn:newsml:reuters.com:*:nL1N2RZ1AQ
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 (Reporting by Aditya Kalra in New Delhi; editing by Euan Rocha
and Jason Neely)
 ((aditya.kalra@tr.com; +91-11-49548021; Twitter @adityakalra;))