CCI freezes Amazon's deal with Future; slaps Rs. 200cr fine
The Competition Commission of India (CCI) Friday suspended its earlier approval for Amazon's deal to acquire a stake in Future Coupons Private Limited. It also imposed a penalty of Rs. 202 crore on the American e-commerce giant for allegedly hiding facts and making false statements while seeking regulatory approvals in 2019. The body said the deal "shall remain in abeyance" for the time being.
Why does it matter?
- CCI's fresh order comes amid an ongoing legal battle between Amazon and Future Group over the latter's proposed Rs. 24,713 crore deal with Mukesh Ambani's Reliance Retail.
- It might be seen as a setback for Amazon in the company's attempts to block the Future-Reliance deal.
- It had told CCI that revoking its 2019 deal with Future would send a bad signal to foreign investors.
What did the CCI say?
CCI said Amazon had "suppressed the actual scope" of the deal and made "false and incorrect statements" during the approvals. It is "necessary to examine the combination (deal) afresh," the body added. Notably, while allowing the deal in 2019, CCI had mentioned that the order shall stand revoked if the information provided by Amazon was found to be incorrect.
What is the controversy all about?
Amazon had invested in Future Group in 2019, acquiring a 49% stake in Future Coupons Ltd. Future is notably India's second-largest retailer, with more than 1,700 stores. But in August last year, Reliance Retail said it would acquire Future's retail, wholesale, logistics, and warehousing business. Amazon objected to that deal saying it was in violation of the 2019 agreement with Future.
Amazon has 60 days for appeal
Amazon now has 60 days to re-appeal for approval with "true, correct, and complete" information, according to the CCI. "We are reviewing the order passed by the CCI and will decide on the next steps in due course," an Amazon spokesperson said, according to The Times of India. Amazon had earlier secured favorable interim rulings from a Singapore arbitrator as well as Indian courts.