In a blow to Amazon, NCLAT upholds CCI ruling

13 Jun 2022 , 11:25 AM

The National Company Law Appellate Tribunal (NCLAT) accepted the Competition Commission of India’s (CCI) ruling to withhold clearance for an investment arrangement between Amazon and a Future group entity that dates back to 2019. This is a blow for Amazon.

The NCLAT also upheld Amazon’s Rs200 crore sentence and gave the corporation 45 days to pay. Under Section 43A of the Competition Act of 2002, this fine is levied for failing to disclose important information about combinations.

The NCLAT confirmed the CCI’s decision, saying it agrees with the antitrust watchdog that Amazon did not make a “full, fair, and straightforward” disclosure about its strategic involvement in Future Retail Ltd, the Future group’s publicly traded entity that managed its flagship banner of Big Bazaar. The NCLAT agreed with the CCI’s finding that Amazon neglected to notify the pertinent facts relative to the combination of the agreements.

The American e-commerce behemoth had filed a complaint with the NCLAT, challenging the Competition Commission of India’s decision to postpone clearance of an investment arrangement between Amazon and a Future Group subsidiary until December 2021.

The regulatory environment in India requires CCI permission for investment deals of this sort or mergers and acquisitions transactions. Only once regulatory permissions from agencies like the CCI or the Securities and Exchange Board of India are received do such deals come to
fruition and can be carried out.

The Rs1,400 crore investment arrangement between Amazon and Future Coupons Pvt Ltd (FCPL) had previously secured all of the necessary regulatory approvals, allowing for the deal’s implementation and money transfer.

After a legal squabble between the two parties erupted over Future group’s plan for an asset sale deal with a Reliance Industries wholly-owned subsidiary for a value of roughly Rs27,000 crore, the anti-trust body’s approval was sought to be canceled on a plea by one Future group entity.

The CCI issued the ruling after determining that Amazon had failed to disclose its intentions and strategic interests in the deal. Amazon challenged the order in the NCLAT appellate forum, denying the accusation.

The transaction for which the CCI withheld permission was the same deal that allowed both parties to seek arbitration from the Singapore International Arbitration Tribunal (SIAC) in the event of a dispute.

Meanwhile, Future Group filed a lawsuit in Indian courts, kicking off the long-running and multi-pronged legal struggle between the two corporations.

Future Group used the CCI’s December 2021 order as the basis for requesting that SIAC’s arbitration proceedings be terminated.
Amazon now has the legal option of appealing this decision to the Supreme Court.