Type to search

Amazon ‘Concealed Facts’ in Future Deal Claims Indian Watchdog
A man walks past an Amazon logo outside the company's collection point in Mumbai, India. Photo: Reuters

• E-commerce giants at loggerheads over Reliance retail assets sell-off

• Amazon also facing a separate India small firms probe 

 

India’s antitrust regulator has accused Amazon.com Inc of concealing facts and making false submissions when it sought approval for a 2019 investment in a Future Group unit, a letter to the US e-commerce giant seen by Reuters has showed.

The letter complicates Amazon’s bitter legal battle with Future Group over the Indian’s firm’s decision to sell its retail assets to Reliance Industries – a matter that is now before India’s Supreme Court. 

Amazon has argued that terms agreed upon in its 2019 deal to pay $192 million for a 49% stake in Future’s gift voucher unit prevent its parent, Future Group, from selling its Future Retail Ltd business to Reliance. 

 

Also on AF: Buffett-Backed Paytm: Five Things About India’s Biggest IPO in a Decade

 

In the letter dated June 4, the Competition Commission of India (CCI) said Amazon hid factual aspects of the transaction by not revealing its strategic interest in Future Retail when it sought approval for the 2019 deal.

“The representations and conduct of Amazon before the Commission amounts to misrepresentation, making false statement and suppression or/and concealment of material facts,” the letter said. It also noted that its review of the submissions made had been prompted by a complaint from Future Group.

In the four-page letter, a so-called ‘show cause notice’, the CCI asked Amazon why it should not take action and penalise the company for providing false information.

Amazon said in a statement to Reuters it had received a letter, was committed to complying with India’s laws and would extend its full cooperation to the CCI.  

 

APPROVAL ORDER

“We are confident that we will be able to address the CCI’s concerns,” it said.  

Vaibhav Choukse, a competition law specialist and partner at J. Sagar Associates, said it was rare for the CCI to issue such a notice and that if the CCI was not satisfied by Amazon’s response, it could lead to a fine and even a review of the deal.

“The CCI has wide powers which includes directions to re-file the approval application and even revoke the approval under exceptional circumstances,” Choukse said.

The CCI’s 2019 approval order states its decision “shall stand revoked if, at any time, the information provided” is found to be incorrect.

 

HOSTILE FLASHPOINT

Shares in Future Retail jumped after Reuters published details of the letter, extending gains to be up nearly 5% in Thursday afternoon trade.

The dispute over Future Retail, which has more than 1,500 supermarket and other outlets, is the most hostile flashpoint between Jeff Bezos’ Amazon and Reliance, run by India’s richest man Mukesh Ambani, as they try to gain the upper hand in winning over the country’s consumers.

Amazon also has a host of other challenges in India, a key growth market where it has committed $6.5 billion in investments, including a separate CCI probe into alleged practices that small businesses say have hurt them. 

In addition, it faces the prospect of more regulations that would restrict the sale of private labels and would prohibit the US firm from allowing its affiliates to list products on its website.

 

  • Reporting by Reuters

 

Read more:

Indian small traders fight back Amazon, Walmart-Flipkart

Amazon wins court block on Future’s asset sell-off

 

AF China Bond