Your browser is currently blocking notification.
Please follow this instruction to subscribe:
X
Notifications are already enabled.
X

Future Retail’s Independent Directors Write To CCI To Revoke Amazon-FCPL Deal Citing FDI, FEMA Violations

Future Retail’s Independent Directors Write To CCI To Revoke Amazon-FCPL Deal Citing FDI, FEMA Violations

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

The directors have also asked CCI to stop Amazon from “perpetuating its evil non-desirable designs” to make FRL bankrupt

Previously CCI has also extended a show-cause notice when it alleged that Amazon hid factual aspects of the transaction by not revealing its strategic interest in Future Retail in the 2019 deal

The independent directors of Future Retail Ltd (FRL) have 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 letter alleges 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.

Now, as the bitter legal battle between Amazon-Future-Reliance heats up, 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.”

In the seven-page letter, that marked the SEBI chairman, finance minister and Prime Minister, the directors have also asked CCI to stop Amazon from “perpetuating its evil non-desirable designs” to make FRL bankrupt.

Amazon has not responded to Inc42’s emailed queries till the time of filing this story.

This is not the first time that Amazon-FCPL’s 2019 deal has been under the CCI radar. In June 2021, CCI also alleged that 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 show-cause notice extended by CCI had stated that its decision “shall stand revoked if, at any time, the information provided is found to be incorrect”.

Amazon Vs Future: A Legal Battle Since 2020

Amazon acquired a 49% stake in Future Coupons for INR 1,500 Cr in 2019, and the latter owns 7.3% shares in Future Retail. Through this transaction, Amazon had also managed to acquire around a 3.58% stake in Future Group.

Thus, Amazon’s case rests on its indirect holding in the Future Group prevents FRL from selling its retail business to Reliance.

In the following year, Future Group entered into an asset sale deal worth $3.4 Bn with Mukesh Ambani-led RIL for selling its retail, wholesale, logistics and warehousing assets to Reliance Retail.

This deal was the beginning of an extensive battle between Amazon and Future Retail.

Amazon Vs Future and Reliance: A Legal Battle Since 2020

Last year, Amazon sent a legal notice to Future stating breach of agreement, which received a favourable ruling in the SIAC. The arbitration panel had in October 2020, put the asset sale of Future Retail to Reliance Retail on hold.

While Future Group moved to Delhi HC alleging interference by Amazon with its deal with RIL, Delhi HC passed a ruling favouring Amazon. This skirmish led to SIAC forming an arbitration tribunal to relook into the case (in January 2021), and HC ordered a status quo on the deal.

Following this, Delhi HC lifted the status quo, and Amazon moved to SC, challenging the ruling. This torpedoed into SC, re-levying the restraint on the RIL and Future Group deal. In September, the SC had stayed all the further proceedings initiated by ecommerce giant Amazon before the Delhi High Court for four weeks. Moreover, The Future Group also sought exclusion from the dispute with the ecommerce giant, which the SIAC declined, stating the FRL is a “proper party” to the ongoing arbitration proceedings.

Later, the Mumbai bench of the National Company Law Tribunal (NCLT) allowed Future group to hold a meeting to approve its $3.4 Bn deal with Reliance Industries Ltd’s (RIL’s) retail unit. The tribunal had also allowed Reliance Retail to hold a meeting of its shareholders and creditors seeking their approval for the $3.4 Bn deal, despite objections raised by Amazon.

As litigations are underway against the deal, on October 1st, Reliance extended the deadline to complete the proposed acquisition till March 31st, 2022. The previous deadline ended on Thursday, September 30th, 2021. The deadline was first extended in April 2021.

Most recently, the US-based ecommerce giant filed for an interim application in the SC seeking a stay on the NCLT-approved FRL’s shareholders and creditors meeting.