India’s competition regulator accused Amazon of covering up facts and making false claims when it sought approval for a 2019 investment in a Future Group unit, letter to US retail giant showed electronic consulted by Reuters.
The letter complicates Amazon’s bitter legal battle with Future Group over the Indian company’s decision to sell its retail assets to Reliance Industries – a case currently before the Indian Supreme Court.
Amazon argued that the terms agreed in its 2019 deal to pay $ 192 million (roughly Rs. 1,430 crore) for a 49% stake in Future’s gift vouchers unit prevent its parent company, Future Group , to sell its Future Retail activity to Reliance.
In the letter dated June 4, the Competition Commission of India (ICC) said that Amazon concealed factual aspects of the transaction by failing to reveal its strategic interest in Future Retail when it sought approval from the deal. 2019 agreement.
“Amazon’s statements and conduct before the Commission constitute a false statement, a misrepresentation and the removal or / and withholding of material facts,” the letter said. He also noted that his review of the submissions had been prompted by a complaint from Future Group.
In the four-page letter, a so-called “show cause notice,” the ICC asked Amazon why it shouldn’t take action and penalize 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 because the letter was not made public.
Amazon said in a statement to Reuters it had received a letter, pledged to comply with Indian laws and would extend its full cooperation to the ICC.
“We are confident that we will be able to address the concerns of the ICC,” he said.
Representatives for Future and the ICC did not respond to Reuters requests for comment.
Vaibhav Choukse, competition law specialist and partner at J. Sagar Associates, said it was rare for the ICC to issue such an opinion and that if the ICC was not satisfied with Amazon’s response, it could result in a fine and even a review of the agreement.
“The ICC has broad powers which include instructions to resubmit the request for approval and even revoke the approval in exceptional circumstances,” Choukse said.
The 2019 ICC approval decree specifies that its decision “is revoked if, at any time, the information provided” turns out to be inaccurate.
Future Retail shares surged after Reuters released details of the letter, extending gains to nearly 5% in Thursday afternoon trading.
Dispute over Future Retail, which has more than 1,500 supermarkets and other outlets, is the most hostile flashpoint between Jeff Bezos’ Amazon and Reliance, led by India’s richest man Mukesh Ambani , as they try to gain the upper hand to conquer the consumer country.
Amazon also has a host of other challenges in India, a key growth market where it has committed $ 6.5 billion (roughly Rs. 48,410 crore) in investments, including a separate ICC investigation into the alleged practices. who small businesses say hurt them.
In addition, it faces the prospect of more regulations that would restrict the sale of private labels and prohibit the US company from allowing its subsidiaries to list products on its website.
ITC’s 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, he said that Amazon had explained its interest in investing in Future’s coupon unit as a unit that would fill gaps in the payments industry in India. But the letter said Amazon had disclosed in other legal forums that the basis of its relationship with Future Coupon was certain special rights it had obtained in Future Retail.
“Amazon has concealed its strategic interest” in Future Retail, the letter said, adding: “This interest and the purpose of the merger (…) were not disclosed to the Commission despite specific demands”.
The ICC also objected to a section of a submission in which Amazon told the regulator that it had nothing to do with a particular legal agreement that two Future entities had signed between them days before its 2019 deal. But Amazon later claimed before an arbitrator that the deal was “part and parcel” of the deal, according to the letter.
© Thomson Reuters 2021