The Competition Commission of India has accused Amazon of lying to the Singapore arbitral tribunal that India’s mergers and anti-trust regulator had accepted the US retailing giant’s contention that Future Retail and its assets had served as a “material inducement” for its investment in Future Coupons Pvt Ltd back in 2019.
In his arguments before the National Company Law Appellate Tribunal (NCLAT), additional solicitor general N. Venkataraman said the commission had approved Amazon’s acquisition of a 49 per cent stake in Future Coupons on the basis that the transaction was solely confined to the coupons, gifts and payments business and Future Retail’s participation in the entire arrangement was limited to the role of a coupon issuer.
Amazon has been arguing that the stake in Future Coupons had also given it an indirect stake and voting interest in Future Retail. It has tried to assert that this indirect stake conferred on Amazon a pre-emptive right to block the sale of Future Retail to the Reliance group under a Rs 24,713 crore deal struck in August 2020.
“This is plain vanilla control (the Amazon deal with Future Coupons) and they should have brought to our notice which they did not,” Venkataraman, representing the CCI told the NCLAT.
Over the past few weeks, Amazon’s options to seek redressal from courts and other legal forums and stop the Future-Reliance deal have been shrinking rapidly, especially after the CCI withdrew its approval for the American retailer’s investment in Future Coupons last December – effectively undermining the premise on which its entire argument has been built.
The Delhi High Court had earlier stayed the Singapore arbitration proceedings against which Amazon had moved the Supreme Court.
The apex court hearing has been pushed back to April 1 but the continuing absence of Justice Hima Kohli — one of the Supreme Court judges in the case — could mean the judges panel would have to be reconstituted afresh that would lead to further delays even as Reliance continues to take over Future group stores.
Amazon also did not utilise the two-month window given by the CCI to seek fresh permission for the Future Coupons deal. The CCI had rescinded the deal in December prompting Amazon to move before the NCLAT in January.
In its December 17 order, the CCI said there was a deliberate design on the part of Amazon to suppress the actual scope and purpose of its proposal for FCPL when it first sought permission and got the approval of the regulator for the deal in 2019.
The real reason behind investing in FCPL was to gain strategic control over FRL, the CCI said, while revoking the deal.
The CCI had issued a show-cause notice to Amazon citing FCPL’s allegations that the former had taken a completely different stand with regard to the transaction before the CCI, the arbitrator and courts.
The allegation was that Amazon told the CCI that its decision to invest in FCPL was on account of its unique business model of loyalty cards.
whereas it said before the courts that there were special and material rights available to FCPL with regard to FRL’s business and its retail assets.
In January, Amazon had filed an appeal at the NCLAT against the December order of the CCI.
At the hearing on Wednesday, the counsel for CCI reiterated the charge that Amazon lied about the scope of its approval. According to a Bloomberg Quint report, additional solicitor general N. Venkataraman said the e-commerce major lied to the arbitral tribunal that the CCI had carefully considered its stand that FRL and its retail assets were the material inducement for the investment in FCPL.
According to the CCI, at the time of its application for the transaction, Amazon had submitted that it decided to invest in FCPL with a view to strengthen and augment its business — including the marketing and distribution of loyalty cards, corporate gift cards and reward cards to corporate customers — and unlock value in the company.
