India scares Amazon by suspending 2019 deal with Future Group, cites suppression of information

NEW DELHI, Dec. 17 (Reuters) – India’s antitrust agency on Friday suspended Amazon.com’s (AMZN.O) deal with Future Group, which could hamper attempts by the US e-commerce giant to block the sale of Future’s retail assets to a leading Indian market.

The regulator ruled that the US company suppressed information while seeking regulatory approval for an investment in Indian retailer Future Group two years ago.

The Indian Competition Commission (ICC) decision could have far-reaching consequences for Amazon’s legal battles with its now estranged partner Future.

Amazon successfully used the terms of its initial $ 200 million investment in Future in 2019 for months to block the Indian retailer’s attempt to sell retail assets to Reliance Industries (RELI.NS) for 3.4 billions of dollars.

The regulator’s 57-page order says it considers it “necessary to re-examine the combination (the agreement)”, adding that its 2019 approval “will remain in abeyance” until then.

The ICC order said Amazon had “removed the actual scope” of the agreement and made “false and incorrect statements” while seeking approvals.

“The approval is on hold. This is absolutely unprecedented,” said Shweta Dubey, a partner at Indian law firm SD Partners, who was previously an ICC official.

“The order appears to have given CCI new power to keep the approval of the combination on hold,” she added.

With antitrust approval of the Future 2019 deal now on hold, it could hurt Amazon’s legal position and retail ambitions, while making it easier for Reliance – the nation’s largest retailer – to acquire. Future, the second actor, said people familiar with the dispute.

The TCC also fined the US company around 2 billion rupees ($ 27 million), adding that Amazon will have time to resubmit information to seek approvals, the TCC added.

However, Future Group is unlikely to cooperate with Amazon if it attempts to reapply for antitrust clearance after the ICC ruling, a directly-informed source told Reuters.

The Indian company is also expected to take CCI’s decision on Friday before various legal bodies to argue that Amazon has no legal basis to challenge its sale of assets, the source added.

Future and Reliance did not respond to a request for comment. Amazon said it was reviewing the order “and would decide on its next steps in due course.”

DETAIL BATTLE

Dispute over Future Retail, which has more than 1,500 supermarkets and other outlets, is the most hostile flashpoint between Jeff Bezos’ Amazon and Reliance, led by India’s richest man Mukesh Ambani , as they try to gain the upper hand to win over retail consumers.

Struck by the COVID-19 pandemic, Future decided last year to sell its retail assets to Reliance for $ 3.4 billion, but Amazon was able to block the sale thanks to legal challenges.

Amazon cited Future’s breach of contracts, arguing that terms agreed in 2019 to pay $ 200 million for a 49% stake in Future’s gift vouchers unit prevented its parent company, Future Group, from selling its Future Retail Ltd (FRTL.NS) activity to some rivals. , including Reliance.

CCI’s review of the deal began after Future, who denies any wrongdoing, complained, saying Amazon was making conflicting statements in various legal forums about the intent of the 2019 transaction.

In June, ICC told Amazon that the U.S. company explained in 2019 its interest in investing in Future’s gift vouchers unit as a solution that would fill gaps in India’s payments industry. But later, TCC said, Amazon revealed in other legal proceedings that the basis for its investment in the Future unit was to obtain special rights to the retail arm, Future Retail.

In Friday’s order, CCI said there was “a deliberate intention on Amazon’s part to remove the actual scope and purpose of the agreement.”

Prior to CCI’s decision, Amazon denied withholding information and warned the watchdog that Future’s offer to unwind the 2019 deal to allow Reliance to consolidate its position “would further restrict competition in the market. Indian detail “.

Reporting by Aditya Kalra in New Delhi; Editing by Euan Rocha, Jane Merriman and Louise Heavens

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