In a setback for Amazon, the Competition Commission of India (CCI) on Friday suspended its approval accorded more than two years back to the e-commerce firm to acquire a 49% stake in Future Coupons (FCPL), following a review of allegations of concealment of information while seeking regulatory nod for the deal. The anti-trust regulator also imposed a Rs 202-crore penalty, which Amazon is required to pay within sixty days.
The matter is sure to lead to another legal battle between Amazon and Future. The two sides have been embroiled in a legal battle for more than a year now over Future Retail’s move to sell its retail assets to Reliance Retail for Rs 24,500 crore.
The order follows complaints filed by FPCL, Future Retail’s independent directors and the Confederation of All India Traders (CAIT) alleging Amazon of failing to disclose the intent to indirectly control Future Retail, the parent firm of FCPL, via its 49% acquisition in FCPL.
The Supreme Court had on November 29 extended by two weeks the deadline for the CCI to decide on CAIT’s plea seeking revocation of approval granted to the Amazon-Future deal in 2019. It also gave liberty to Amazon to raise objections before the Commission. After reviewing the charges flagged by Future that Amazon had failed to notify certain commercial arrangements as part of the 2019 deal, the CCI said “the actual purpose and particulars” of the 2019 deal has sought to “establish false representation and suppression of material facts”.
All disclosures contraventions arise from a deliberate design by Amazon to “suppress the actual scope” of the 2019 Future deal, the CCI stated in its 57-page order, adding that it is now “necessary to examine the combination (deal) afresh”, till then its approval “shall remain in abeyance”.
“Amazon had suppressed the actual scope of the combination and had made false and incorrect statements” in relation to the commercial agreement, “which are intertwined into the scope and purpose of the Combination”, the CCI order said.
“Given that the Combination is between players who are known in the online marketplace and offline retailing and they have contemplated strategic alignment between their businesses, the Commission considers it necessary to examine the combination afresh based on a notice to be given in Form II with true, correct and complete information, as required therein. Accordingly, in exercise of the powers conferred under sub-section (2) of Section 45 of the Act, the Commission hereby directs Amazon to give notice in Form II within a period of 60 days from the receipt of this order, and, till disposal of such notice, the approval granted vide Order dated 28thNovember, 2019… shall remain in abeyance,” the order stated.
In November, independent directors of FRL had alleged that Amazon had misled CCI as it was earlier in talks to invest directly in the retail company, but changed plans only after the government came up with the Press Note 2 rules that tightened norms for foreign e-commerce entities operating in India.
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