Future Vs Amazon: NCLAT To Hear Plea Against Suspension Of CCI Approval
The National Company Law Appellate Tribunal today agreed to hear Amazon.com NV Investment Holdings' challenge against the competition regulator's order suspending approval to its 2019 investment in the Future Group.
Last month, the Competition Commission of India had suspended its approval to Amazon's 2019 deal with Future Coupons Pvt. and imposed a Rs 200-crore penalty on the U.S. e-commerce major, saying it failed to identify and notify its strategic interest in the Indian retailer.
The competition regulator had noted that Amazon's interest in Future Retail Ltd. — that owns the Big Bazaar chain of stores — was not adequately disclosed while seeking its nod.
On Thursday, Senior Advocate Gopal Subramanium appearing for Amazon argued before the appellate tribunal that all the relevant information was disclosed to the regulator in 2019.
The nature of agreement was such that the money invested by Amazon in Future Coupons would be transmitted to Future Retail and that was disclosed to the commission.Amazon's Counsel
In 2019, Amazon had invested in the Future Group by acquiring a 49% stake in Future Coupons—a promoter entity of Future Retail.
According to the shareholders' agreement, Amazon was granted a call option, allowing it to acquire all or part of the promoters' shareholding in Future Retail. The option could be exercised between the third and tenth years in certain circumstances, subject to applicable laws.
Subramanium informed the appellate tribunal that the put option being part of the agreements was known to the CCI when its approval was sought and the company informed the regulator that if the put option was exercised it would not be done without seeking the regulator's nod.
No agreement was made effective until the CCI approval was granted. Further, the December 2021 order of the CCI itself notes that arbitration is an independent proceeding.Amazon's Counsel
The December order of the commission is being relied upon by the Future Group to seek the termination of the ongoing arbitration proceedings with Amazon.
The Future Group had first approached the Singapore arbitral tribunal to seek termination and subsequently moved the Delhi High Court requesting a direction to the tribunal to prioritise the hearing of the termination application.
While the single judge bench of the high court declined the relief, the division bench granted a stay on the arbitration proceedings citing the CCI's order.
The arbitration between the two groups began in 2020 after Amazon alleged violation of contractual obligations by the Future Group. Amazon has alleged that Future Retail's Rs 27,513 crore transaction for selling its assets to Reliance Retail Ventures Ltd. violates the 2019 agreement. FRL's assets cannot be sold to any restricted entity which includes the Reliance Group, Amazon has argued before courts.
The NCLAT has issued notice on Amazon's petition seeking response from the Competition Commission. The bench will now take up the case on Feb. 2.
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