The Competition Commission of India has issued a show cause notice to seeking an explanation from the ecommerce major regarding a deal with a Future Group firm that was approved by the watchdog in 2019, according to sources.
The notice has been issued following a complaint filed by the Future Group, which is locked in a bitter legal battle with Amazon over the former's proposed Rs 24,713 crore deal with Reliance Industries.
"We are in receipt of a show-cause notice from the CCI based on the complaint filed by Future Group as a part of an ongoing dispute. We are committed to comply with the laws of India and will extend full cooperation to the CCI on this matter," an Amazon spokesperson said on Thursday.
The spokesperson exuded confidence that the company will be able to address the CCI's concerns.
"However, as our dispute with the Future Group is pending litigation, and as we also bound by confidentiality obligations, we are unable to comment on the merits or substance of any allegations at this stage...," the spokesperson said.
There were no immediate comments from Future Group.
On Thursday, the Future Group submitted a copy of CCI's notice to Amazon to the Supreme Court, which is hearing a plea filed by Amazon related to the ongoing dispute.
In November 2019, CCI had given its approval for Amazon to acquire a 49 percent stake in Future Coupons (FCL). FCL is a shareholder in Future Retail Ltd.
CCI had sent the notice to Amazon on June 4. The notice pertains to Amazon's submissions while seeking a nod for the FCL deal, the sources said.
Deals beyond a certain threshold require approval from CCI. The watchdog has wide powers, including to revoke its clearance for any transaction if it is found at any time that the information provided by the acquirer was incorrect.
In the notice, CCI has alleged Amazon of concealing its strategic interest over Future Retail and that such interest was not disclosed to the regulator previously.
Apart from non-disclosure, false and incorrect representations have also been made in relation to the 2019 transaction, according to the notice, a copy of which was seen by PTI.
"... you are being issued this show cause notice to explain, in writing, as to why you shall not be found to have -- failed to give notice in respect of FRL SHA (Future Retail Ltd Shareholding Agreement) and furnished false and incorrect information and concealed/ suppressed material facts, in contravention of the said provisions of the (Competition) Act," it said.
In August 2019, Amazon had agreed to purchase 49 percent of one of Future's unlisted firms, FCL (which owns 7.3 percent equity in BSE-listed Future Retail Ltd through convertible warrants), with the right to buy into the flagship Future Retail after a period of three to 10 years.
A year later, Reliance Retail Ventures Ltd had entered into a pact with Future Group to acquire the retail and wholesale business and the logistics and warehousing business for Rs 24,713 crore.
Amazon dragged Future Group into arbitration at the Singapore International Arbitration Centre (SIAC), arguing that its 2019 deal prevents the selling of Future Retail Ltd business to rivals. In October last year, an interim award was passed by the Emergency Arbitrator (EA) in favour of the US ecommerce major.
The EA barred Future Retail from taking any step to dispose of or encumber its assets or issuing any securities to secure any funding from a restricted party. Amazon and Future Group have also filed litigations in Indian courts, including the Supreme Court, on the issue.
The SIAC has concluded its hearing on the plea filed by Amazon in the matter and is likely to pronounce a judgement in a month.
The Future Group-Reliance deal was initially expected to close by March-end. However, in April, Reliance Industries said it was extending the timeline for the "Long Stop Date" from March 31, 2021, to September 30, 2021.
The deal has received clearance from regulators such as CCI, SEBI, and bourses, and the scheme of arrangement is now awaiting a nod from the NCLT and shareholders.
Edited by Megha Reddy
Link : https://yourstory.com/2021/07/cci-notice-amazon-explanation-fcl-deal
Author :- Press Trust of India ( )
July 23, 2021 at 10:21AM
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