India's antitrust body halts Amazon's 2019 deal with retailer Future (updated)

Future Enterprises

17/12/2021 13:09

(Updates with more details from order, context)
    By Aditya Kalra
    NEW DELHI, Dec 17 (Reuters) - India's antitrust agency on
Friday suspended Amazon.com's  AMZN.O  2019 deal with Future
Group, potentially denting the U.S. company's attempts to block
the sale of Future's retail assets to an Indian peer.
    The regulator ruled that the U.S. e-commerce group had
suppressed information while seeking regulatory approval on an
investment into Indian retailer Future Group two years ago. 
    The ruling by the Competition Commission of India (CCI)
could have far-reaching consequences for Amazon's legal battles
with now estranged partner Future.
    Amazon has for months successfully used the terms of its
toehold $200 million investment in Future in 2019 to block the
Indian retailer's attempt to sell retail assets to Reliance
Industries  RELI.NS  for $3.4 billion.
    The regulator's 57-page order said it considers "it
necessary to examine the combination (deal) afresh," adding its
approval from 2019 "shall remain in abeyance" until then.
    The CCI's order said Amazon had "suppressed the actual
scope" of the deal and had made "false and incorrect statements"
while seeking approvals. The CCI order imposed a penalty of
around 2 billion rupees ($27 million) on the U.S. company.
    "The approval is suspended. This is absolutely
unprecedented," said Shweta Dubey, a partner at Indian law firm
SD Partners, who was formerly a CCI official.
    "The order seems to have found new power for CCI to keep the
combination approval in abeyance," she added.
    Amazon will be given time to submit information again to
seek approvals, the CCI added.
    Future and Reliance did not respond to a request for
comment. Amazon said it is reviewing the order "and will decide
on next steps in due course."
    The 2019 Future deal approval being put on hold could dent
Amazon's legal position and retail ambitions, while making it
easier for Reliance - the country's largest retailer - to
acquire number two player Future, people familiar with the
dispute said. 
    Amazon has argued that terms agreed in its 2019 deal to pay
$200 million for a 49% stake in Future's gift voucher unit
prevent parent, Future Group, from selling its Future Retail Ltd
 FRTL.NS  business to certain rivals, including Reliance.
    But after Future complained to the CCI that Amazon had
concealed facts, the CCI in June sought explanation from Amazon
saying it hid factual aspects of the transaction http://reut.rs/3I1MJ4r
 by not revealing its strategic interest in Future Retail while
seeking approvals.
    Amazon, in responses to CCI reported by Reuters this week https://reut.rs/3q526kb,
 said it never concealed material information, warning the
watchdog that the deal's revocation would send a negative signal
to foreign investors.
    The Future-Reliance deal has been on hold for months as
Amazon got favourable interim rulings from a Singapore
arbitrator and Indian courts.
    Future denies any wrongdoing.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
EXCLUSIVE Amazon says India revoking Future deal would boost
Reliance, hurt competition    https://reut.rs/33nMWyN
Analysis: Battle of the billionaires - Bezos, Ambani gun for
India retail supremacy    https://reut.rs/3egABPn
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 (Reporting by Aditya Kalra in New Delhi;
Editing by Euan Rocha and Jane Merriman)
 ((aditya.kalra@tr.com; +91-11-49548021; Twitter @adityakalra;))