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After Future Retail’s Independent Directors, CAIT Requests CCI To Revoke Amazon-FCPL 2019 Deal

After Future Retail’s Independent Directors, CAIT Requests CCI To Revoke Amazon-FCPL 2019 Deal

CAIT has requested that CCI revoke Amazon’s part acquisition of Future Coupons as the ecommerce major made false statements for getting the regulatory nod for the two-year-old deal

Recently Future Retail’s independent directors too asked CCI to nullify the deal as Amazon “concealed facts, made misrepresentations to the CCI to seek approval for its investment in Future Coupons

The traders’ body has been after Amazon (and other foreign etailers) as the ecommerce major’s presence has severely affected the small, offline traders’ community

The Confederation of All India Traders (CAIT) has written to the Competition Commission of India (CCI) requesting it to revoke the approval it had given to Amazon’s part acquisition of Future Coupons (FCPL) in November 2019.

The move comes shortly after Future Retail’s (FRL) independent directors, too, wrote to the anti-trust watchdog. It had stated that Amazon received CCI’s nod to the deal for investment in FCPL, and not for acquiring strategic, material and special rights over FRL similar to FRL’s shareholders.

The directors stated in the letter that Amazon “concealed facts, made misrepresentations to the CCI to seek approval for its investment in Future Coupons, a promoter holding company.”

Reiterating the directors’ statements, CAIT stated in the letter that ecommerce major had made false statements for getting the regulatory nod for the two-year-old deal.

CAIT argued that CCI cannot derelict from its duty of revoking the approval. Further, any other action of the watchdog such as the levy of penalty, will not suffice and will be illegal. It will be against public policy and cause public harm, the trader’s body added.

Before this, too, CAIT’s secretary-general Praveen Khandelwal has taken shots at Amazon, calling it a “perpetual offender of Indian laws”. He stated that Amazon should not be preaching compliance with laws, and “must learn to obey laws first”.

Why Is CAIT After Amazon?

It is to be noted that the traders’ body has been at loggerheads with foreign etailers, including and especially Amazon. CAIT has on numerous occasions, written to the CCI, demanding immediate steps for an aggressive investigation into the business model of both Amazon and Flipkart in reference to complaints of dominance and non-competitive business practices.

Calling Amazon (and Flipkart) the “new edition of East India Company”, CAIT has also pointed out the need for “consolidation of the nationalist forces” as foreign ecommerce companies will adversely affect the country’s economy and retail market.

Founded in 1990, CAIT is an apex trade body representing 8 Cr Indian traders and 40K+ trade associations. It also claims to be the world’s largest non-corporate SME organisation and its main agenda is to promote the welfare of offline and small retailers.

It claims that Amazon’s presence is a threat to the Indian retail ecosystem, despite the government’s draft ecommerce policy which looks to tackle the issue of predatory pricing, flash sales and the data dominance of ecommerce marketplaces.

Amazon Vs Future – In Brief

In September 2019, US-based ecommerce giant Amazon informed the CCI that it had proposed to acquire 49% stakes in Future Coupons. The deal had reportedly also mentioned a list of 30 entities with whom the Future Coupons could not transact, including Reliance Retail, a subsidiary of Reliance Industries Limited. This was supposed to be another exclusive deal with Future Group, similar to a deal done by Amazon with Shoppers Stop in 2017 by acquiring a 5% stake at INR 180 Cr.

Amazon Vs Future Group and reliance

While the restraint was on Future Coupons, Future Coupons owns 7.3% shares in Future Retail. Through this transaction, Amazon had also managed to acquire around a 3.58% stake in Future Retail — the business that is set to be acquired by Reliance Retail.

However, regardless of the Amazon-Future Group contract, Future Group in August 2020 announced a deal with Reliance Retail. According to the deal terms, Reliance Retail will acquire the entire retail, wholesale, logistics and warehousing businesses of the Future Group at INR 24,713 Cr.

Consequently, the Reliance – Future deal has been bitterly contested by Amazon through the Singapore Arbitration. Escalating the matter from the SIAC to Delhi HC, now, a decision by the Supreme Court is pending over a petition filed by the US-based ecommerce major.