Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Exclusive-India watchdog accuses Amazon of concealing facts in deal for Future Group unit

Stock MarketsJul 22, 2021 05:00AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A man walks past an Amazon logo outside the company's collection point in Mumbai, India, March 19, 2021. REUTERS/Francis Mascarenhas

By Aditya Kalra

NEW DELHI (Reuters) -India's antitrust regulator has accused Amazon.com Inc (NASDAQ:AMZN) of concealing facts and making false submissions when it sought approval for a 2019 investment in a Future Group unit, a letter to the U.S. e-commerce giant seen by Reuters showed.

The letter complicates Amazon's bitter legal battle with Future Group over the Indian's firm's decision to sell its retail assets to Reliance Industries - a matter that is now before India's Supreme Court.

Amazon has argued that terms agreed upon in its 2019 deal to pay $192 million for a 49% stake in Future's gift voucher unit prevent its parent, Future Group, from selling its Future Retail Ltd business to Reliance.

In the letter dated June 4, the Competition Commission of India (CCI) said 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 representations and conduct of Amazon before the Commission amounts to misrepresentation, making false statement and suppression or/and concealment of material facts," the letter said. It also noted that its review of the submissions made had been prompted by a complaint from Future Group.

In the four-page letter, a so-called 'show cause notice', the CCI asked Amazon why it should not take action and penalise the company for providing false information.

Amazon has yet to respond, according to a source with direct knowledge of the matter who declined to be identified as the letter has not been made public.

Amazon said in a statement to Reuters it had received a letter, was committed to complying with India's laws and would extend its full cooperation to the CCI.

"We are confident that we will be able to address the CCI’s concerns," it said.

Representatives for Future and the CCI did not respond to Reuters requests for comment.

Vaibhav Choukse, a competition law specialist and partner at J. Sagar Associates, said it was rare for the CCI to issue such a notice and that if the CCI was not satisfied by Amazon's response, it could lead to a fine and even a review of the deal.

"The CCI has wide powers which includes directions to re-file the approval application and even revoke the approval under exceptional circumstances," Choukse said.

The CCI's 2019 approval order states its decision "shall stand revoked if, at any time, the information provided" is found to be incorrect.

Shares in Future Retail jumped after Reuters published details of the letter, extending gains to be up nearly 5% in Thursday afternoon trade.

SUBMISSIONS COMPARED

The dispute over Future Retail, which has more than 1,500 supermarket and other outlets, is the most hostile flashpoint between Jeff Bezos' Amazon and Reliance, run by India's richest man Mukesh Ambani, as they try to gain the upper hand in winning over the country's consumers.

Amazon also has a host of other challenges in India, a key growth market where it has committed $6.5 billion in investments, including a separate CCI probe into alleged practices that small businesses say have hurt them.

In addition, it faces the prospect of more regulations that would restrict the sale of private labels and would prohibit the U.S. firm from allowing its affiliates to list products on its website.

The CCI letter compared three sets of submissions Amazon made to it in 2019 with submissions made later to other legal forums, saying they were "contradictory."

In particular, it said Amazon had explained its interest in investing in Future's coupon unit as one that would address gaps in India's payments industry. But the letter stated Amazon had disclosed in other legal forums that the foundation of its relationship with Future Coupon was certain special rights it obtained over Future Retail.

"Amazon has concealed its strategic interest" in Future Retail, the letter said, adding: "Such interest and the purpose of the combination ... was not disclosed to the Commission despite specific requirements."

The CCI also objected to one section of a submission where Amazon had told the regulator it had nothing to do with one particular legal agreement that two Future entities had signed between themselves days ahead of its 2019 deal. But Amazon later claimed before an arbitrator that the agreement was an "integrated part" of the transaction, the letter said.

Exclusive-India watchdog accuses Amazon of concealing facts in deal for Future Group unit
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email