War for Indian Retail/eCommerce space is getting scarier every day. Flipkart, Amazon, Reliance Retail, DMart, Future Retail are all players in the same boat who are fighting for the steering wheel. For the last many months, Amazon and Future Retail are involved in a long battle wherein no one is ready to take the beat.
This battle began after Future Retail agreed to sell its assets to Mukesh Ambani’s Reliance Group on a slump basis for Rs 24,500 crore last year. Amazon alleges that Future violated their contract—a $200 million investment in 2019—by selling its retail assets to RIL last year. Future says it did no wrong.
CCI of India, suspends, Amazon’s deal with Future Group
In the latest episode of the battle between Amazon and Future Retail, the Competition Commission of India (CCI) suspended Amazon’s deal with Future Group after it reviewed complaints that the American e-commerce giant concealed information while seeking regulatory approval.
According to India’s anti-trust regulator, Amazon suppressed the actual purpose and particulars of the 2019 deal and sought to establish false representation and suppression of material facts. CCI thinks that it is now necessary to examine the deal afresh and said its approval shall remain in abeyance until then.
Future Coupons Private Ltd (FPCL) and the Confederation of All India Traders (CAIT) charged Amazon, by the complainants of not disclosing the intent to indirectly control the parent firm, Future Retail Ltd, through its acquisition of 49 percent stake in FPCL.
The traders’ body released an extract from an “email” which they claim it was sent by top Amazon India official Rakesh Bakshi to Amazon chief executive officer Jeff Bezos. According to the seller’s body, the letter does not speak a word regarding the business of FPCL. It shows the real intention of Amazon i.e. to take control of future retail.
Future Group complained to CCI that Amazon concealed salient parts of their contract while seeking approval to purchase its unit Future Coupons Private Ltd in 2019.
Independent directors are also painting Amazon is not so good lights
Notably, independent directors of FRL had also alleged that Amazon had misled CCI. It was earlier in talks to invest directly in the Indian retail company, and it changed its plan only after the government came up with the Press Note 2 rules which tightened norms for foreign e-commerce entities operating in India.
The independent directors also alleged that Amazon never intended to invest in Future Coupons Pvt Ltd (FCPL) because of its “unique business model and strong growth potential” – the reasons which Amazon had presented to the competition regulator.
The independent directors also examined the pre-contractual negotiation records of Amazon’s investment in FCPL. They found that the representations made by Amazon in its CCI application “completely contradict internal correspondences”.
So, is the war is between Amazon and Future Retail over? We don’t think so. When it will be over? Only time will tell the answer.
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