Amazon India Writes To SEBI, BSE, NSE, Asks Not To Okay Future-RIL Deal

Ecommerce giant Amazon has written to markets regulator Securities and Exchange Board of India (SEBI), Bombay Stock Exchange (BSE) and National Stock Exchange (NSE), urging them to take into consideration the Singapore arbitrator’s interim judgment that has put on hold the INR 24,713 Cr deal between Future group and Mukesh Ambani’s Reliance Industries Ltd while reviewing the proposed transaction.

The development follows reports of the US tech and ecommerce giant planning to file a case with an Indian high court against the deal. 

The Future Group-RIL deal is subject to approvals from various regulatory authorities, including the Securities and Exchange Board of India (SEBI) and the Competition Commission of India (CCI).

It is worth noting that India’s antitrust watchdog, the Competition Commission of India (CCI) is also reviewing the online and offline aspects of the Reliance and Future Group deal and their impact on competition in the sector.

“With respect to upholding the sanctity of contractual obligations, it is prudent that SEBI and other authorities take into consideration the interim order of the Singapore arbitrator when they are reviewing the proposed deal,” one of the sources told PTI.

On Sunday, Amazon got an interim relief over its dispute with Future Group, managing to pause the merger process for at least 90 days.

The Amazon-RIL standoff has, however, opened a debate over the scope of influence that the Singapore arbitration court has in India. 

Mayank Mishra, a partner at law firm IndusLaw, says that the interim order by the emergency arbitrator is binding on both parties concerned — Amazon and Future Group. An emergency arbitrator is appointed, pending the constitution of an actual arbitral tribunal, to consider applications for urgent relief that cannot wait until the constitution of the actual tribunal. 

Reliance can challenge the SIAC interim order under Section 37 of the Arbitration and Conciliation Act, 1996.

Manoj K Singh, founding partner of New Delhi-headquartered law firm Singh and Associates feels that both parties would have to comply with the Singapore-based emergency arbitrator’s interim order since Indian courts have lately held that decisions taken by the SIAC are applicable in the Indian scenario as well. 

Amazon, which had last year bought a 49% stake in Future Coupons, the promoter-entity of Future Retail, has contended that according to its contract with Future, the sale of the business to rivals (Reliance) is barred. 

In August, Reliance Retail entered into a deal to acquire the retail, wholesale, logistics, and warehousing businesses of the Future Group for INR 24K Cr. Biyani’s Future Enterprises Ltd (FEL) retained the manufacturing and distribution of FMCG goods, integrated fashion sourcing and manufacturing businesses, its insurance joint venture with Generali, and a joint venture with NTC Mills.

Amazon vs Reliance

Amazon’s decision to pursue legal action against Future Group will also have a bearing on the competition among the retail giants in India. 

With the launch of its online store JioMart earlier this year, Reliance Retail entered into direct competition with Amazon in the ecommerce sector. Both platforms have beefed up their online offerings, in terms of product categories and discounts, as the Diwali festive season nears. 

In the last couple of months, Reliance Retail has been attracting investments from several companies, some of which have previously invested in Reliance’s digital venture Jio Platforms as well. On October 6, Inc42 reported that the United Arab Emirates (UAE)-based sovereign wealth fund Abu Dhabi Investment Authority (ADIA) has committed to invest INR 5,512.50 Cr in Reliance Industries’ retail unit Reliance Retail in exchange for 1.20% equity stake on a fully diluted basis. 

When the investment comes through, Reliance Retail will have raised INR 37,710 Cr from global investors including Silver Lake, KKR, General Atlantic, Mubadala, GIC, TPG and ADIA in less than four weeks.