CCI Revokes Approval For Amazon's Deal With Future Group; Imposes Rs 200 Crore Penalty On Amazon For Violations

The Competition Commission of India has kept in abeyance the approval granted for the American e-commerce giant Aamzon's deal with Future Group.

In a 57-page order passed on December 17, the CCI said that the approval granted as per order Order dated 28th November, 2019, for the deal of Amazon.com NV Investment Holdings LLC to acquire 49 percent stake in Future Coupons Private Limited (Future) will remain frozen. The CCI passed this order after holding that Amazon obtained the approval by concealing certain relevant information.

The CCI said Amazon suppressed "the actual purpose and particulars" of the 2019 deal and sought to "establish false representation and suppression of material facts". CCI said it was now "necessary to examine" the deal afresh and said its approval "shall remain in abeyance" until then.

A penalty of Rs 200 crore has also been imposed on Amazon. "In exercise of the powers conferred under sub-section (2) of Section 45 of the Act, the Commission hereby directs Amazon to give notice in Form II within a period of 60 days from the receipt of this order, and, till disposal of such notice, the approval granted vide Order dated 28th November, 2019, in Combination Registration No. C-2019/09/688, shall remain in abeyance," the CCI order read.

 "...all the contraventions discussed above arise from a deliberate design on the part of Amazon to suppress the actual scope and purpose of the Combination, and the Commission finds no mitigating factor. Resultantly, the Commission considers it appropriate to levy the maximum penalty of INR One Crore each under the provisions of Section 44 and Section 45 of Act. Accordingly, Amazon is directed to pay a penalty of INR Two Crore", the CCI added.

The CCI imposed a further penalty of Rs 200 crore by saying :

"As regards failure to notify combination in terms of the obligation cast under Section 6(2) of the Act, Section 43A of the Act enables the Commission to impose a penalty, which may extend to one percent of the total turnover or the assets, whichever is higher, of such a combination. Accordingly, for the above mentioned reasons, the Commission hereby imposes a penalty of INR Two Hundred Crore upon Amazon".

An organization of retailers named CAIT(Confederation of All India Traders) had made a complaint to the CCI against the Amazon-Future deal. On November 29, the Supreme Court had asked the CCI to grant two more weeks time to Amazon to respond to the show-cause notice issued by the CCI on CAIT complaint.

Earlier in July this year, CCI had issued a show-cause notice to Amazon on the issue of revocation of approval given to the US company for investment transaction with Future Coupons Pvt Ltd (FCPL) over the complaints filed by Future Group.

Senior Advocates Gopal Subramanium and Amit Sibal represented Amazon before CCI. Future Coupons Private Ltd was represented by Senior Advocates Harish Salve and Ramji Srinivasan. Senior Advocates Krishnan Venugopal and Saurabh Kirpal appeared for CAIT.

The Amazon-Future deal has given rise to several rounds of litigation in India. Amazon invoked arbitration proceedings in Singapore to halt Future Retail's deal with the Reliance group. An emergency award was passed by the Singapore Arbitrator to halt the Future-Reliance deal. This was challenged by FRL in the Delhi High Court. Ultimately, the matter reached the Supreme Court, which approved the emergency award passed by the Singapore Arbitrator.

On September 9, 2021, the Supreme Court passed an order directing authorities like NCLT, SEBI etc to not pass final orders on the Future-Reliance deal.

Click here to read/download the order