Amazon To NCLAT: CCI Cannot Question Court Submissions

An employee pushes shopping carts at a Big Bazaar hypermarket, operated by Future Retail Ltd., in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

A statutory authority does not have the power to examine the submissions made before another court or a tribunal, Amazon.com NV Investment Holdings LLC argued before the National Company Law Appellate Tribunal on Wednesday.

The U.S. e-commerce major made this argument in the context of the Competition Commission of India's show-cause notice issued to it in June last year.

In its notice, the regulator had pointed to contradictory statements by Amazon before the CCI and the arbitral tribunal as well as courts on several issues. For instance:

Purpose of the combination: The CCI said it was told that Amazon decided to invest in Future Coupons Pvt. because of its unique business model and growth potential. Whereas the arbitral tribunal and courts in India were told that the foundation of the relationship was the special rights available to Future Coupons over Future Retail Ltd.

Nature of rights in Future Retail: Amazon had described its right in Future Retail as minority protection, the regulator had pointed out. But courts were told that the rights were contractually agreed, promised and provided as a material consideration against Amazon's investment in Future Coupons.

Subsequently in December, the CCI suspended the approval to Amazon's 2019 deal with Future Coupons and imposed a Rs 200-crore penalty on the U.S. e-commerce major, saying it failed to adequately identify and notify its strategic interest in Future Retail.

Amazon has challenged this order. In the previous hearing, Senior Advocate Gopal Subramanium questioned the power of the competition regulator to revisit an earlier approval arguing there is no specific provision in the law that allows for it.

The arguments on Wednesday revolved around Amazon's insistence that there was no contradiction in its submissions before the CCI and other forums. And that the regulator could not have gone into the submissions made by it before other courts.

CCI Cannot Look Into Arguments Made Before Other Courts: Amazon

Subramanium reiterated Amazon's stance that all the relevant agreements, accompanied by competition assessment, were disclosed to the CCI in 2019. The CCI order suspending the approval asks Amazon to submit the very agreements which have already been disclosed, he said.

For instance, Subramanium said, the regulator was informed that Amazon Seller Services Pvt. and Future Retail undertake some overlapping business activities and the competition assessment was disclosed to the CCI. "The competition assessment taken by us has not been questioned by the CCI."

He also argued that the regulator cannot examine the pleadings made by Amazon in a different case, that is the arbitration proceedings.

I really have to ask. Are proceedings in court, statement and submissions made in a court going to be examined by a statutory authority ? Where is the rule of law?

Senior Advocate Gopal Subramanium.

After the CCI's December order, a division bench of the Delhi High Court stayed the arbitration proceedings between Future Group and Amazon citing suspension of approval to the 2019 transaction.

Subramanium told the bench that this was the first time that the competition regulator had done something like this and it raises the question whether a statutory authority can question the submissions before the arbitral tribunal. "Such actions from the regulator would be a deterrent to foreign direct investment in the country."

The hearing before the appellate tribunal will be on Monday.