Amazon was set that it was committed to complying with Indian laws, and it would be extending its full cooperation with the CCI (Competition Commission of India).
Highlights:
Amazon has been accused by the Indian antitrust regulators for concealing the facts and filing false claims when seeking approval for its 2019 investment in the Future Group, a letter to the U.S. e-commerce giant revealed by Reuters.
The letter complicates Amazon’s bitter legal battle with Future Group over the Indian company’s decision to sell their retail assets to Reliance Industries, before the Supreme Court of India.
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In 2019 Amazon argued that the terms agreed to pay $192 million (roughly Rs.1, 430 crore in Indian currency) for a 49 percent stake in Future’s voucher unit prevented Future Group, its parent company. The founder of Amazon will sell his Future Retail business to Reliance.
In June 4 when the letter was dated, the Competition Commission of India (CCI) said Amazon hid the factual aspects of the transaction without disclosing its strategic interest in Future Retail.
This is the false statements and suppression and concealment of material facts. It also noted that the complaints from Future Group prompted a review of submissions.
In a four-page letter called ‘Cause report,’ CCI asked Amazon why it shouldn’t take action and punish companies for providing false information.
According to sources with direct knowledge of the matter, Amazon has yet to respond, declining to identify it as a letter that has not been made public.
Amazon founders said in a statement to Reuters that the company received a letter Committed for complying with Indian laws and will expand full cooperation to the CCI.
In that statement, the wordings are “We are confident that we can address CCI concerns,” the report said by Amazon.
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Representatives for the Future and CCI did not respond to Reuter’s requests for comment.
Vaibhav Choukse is one of the competition law experts and partner at J. Sagar Associates; said CCI rarely makes this kind of announcements. If CCI is not satisfied with the response of Amazon, it could lead to a penalty and even a review of the deal.
“The CCI has broad powers, which include advice on resubmission and revoking approval under special circumstances,” Choukse said.
In 2019 the CCI approval order states that the decision to Amazon “will be revoked if the information provided at any time is found to be inaccurate.”
The shares in the Future Retail surged after Reuters released details of the letter. It increased profits by nearly 5% in Thursday afternoon trading.
Comparison of the submission
The dispute over Future Retail, which has more than 1,500 supermarkets and other stores, is the most hostile flashpoint between Amazon and Jeff Bezos’ Reliance, run by Indian billionaire Mukesh Ambani as they try to gain an advantage in defeating the country’s consumers.
Amazon also has other more challenges in India. It is a key growth market with $6.5 billion (approximately Rs.48, 410 crore in Indian currency) in investments, as well as a separate CCI investigation into alleged practices that small businesses say have hurt them.
The company also faces additional regulations that will restrict private label sales and will ban U.S. companies from allowing affiliates to list products on their websites.
The letter of the CCI which compares the three submissions Amazon submitted in 2019 to submissions later to other legal forums, stating the controversies.
The company said Amazon described its interest in investing in its Futures Coupon unit as a project to bridge the gap in the Indian payments industry. But the letter of the CCI states that Amazon has revealed in the other legal forums in India that the foundation of its relationship with Future Coupon comes from Future Retail.
After that Amazon has concealed its strategic interest in Future Retail and the letter is added for the submission. The CCI also objected to part of the submission letter that Amazon told regulators it had nothing to do with a legal agreement that two future entities signed between them several days before the 2019 agreement but later. Amazon had claimed before arbitration that the deal was an “Integrated part” of the transaction.