NCLAT Upholds CCI Order, Asks Amazon To Pay INR 200 Cr

The National Company Law Appellate Tribunal (NCLAT) on Monday rejected Amazon's plea challenging the decision of fair trade regulator Competition Commission of India (CCI) to suspend the approval for the e-commerce major’s deal with Future Coupons. It also slapped a fine of INR 200 crore to Amazon for non-disclosure of relevant information on combinations under the Competition Act, 2002.

Confirming the CCI’s ruling, the NCLAT said that it is in full agreement with the anti-trust watchdog that Amazon had not made a full disclosure about its strategic interest in Future Retail Ltd - Future group’s publicly listed company which ran its flagship banner of Big Bazaar.

However, Amazon said all agreements regarding buying 49 per cent stakes in Future Coupons Private Limited (FCPL) were disclosed before the CCI and nothing was hidden. Competition assessment of the deal was also undertaken by the Commission and it was held that there was no appreciable adverse effect on the competition. It said that after assessing all this, the CCI had granted the approval.

E-commerce giant had approached the NCLAT to challenge the CCI’s decision of December 2021 to keep its approval for the investment deal between Amazon and a Future group firm in abeyance. The move follows a Delhi High Court judgement on 5 January this year that suspended Amazon’s arbitration proceedings in Singapore against estranged partner Future Group for contract violations.

Currently, the US giant has filed an intervention application before the Mumbai-NCLT in an attempt to restrict the banks from disposing or alienating Future Group’s assets. Future group is currently facing insolvency proceedings. Earlier, Amazon had accused Future Retail’s independent directors of ‘facilitating’ alienation and transfer of the latter’s 835 retail stores in favour of Reliance Retail.

These stores — both large-format such as Big Bazaar and small-format such as Easy Day and Heritage Fresh — were transferred in the teeth of binding injunctions and court orders, Amazon had said in a letter addressed to independent directors of Future Retail (FRL).

The letter read, “While the scheme has failed, it now appears that FRL sought to purportedly alienate its retail stores in favour of the Mukesh Ambani group by any means possible. You, as independent directors, have facilitated this fraudulent stratagem to defraud the Indian public and regulators.”

In August 2020, Future Group entered into an agreement with Reliance Retail to sell its retail, wholesale, logistics and warehousing to the latter as it was under immense pressure from its lenders and the deal in seen as a bid by the group to cut down on the same.

Following the nationwide lockdown in March 2020 in view of the COVID-19 pandemic, the retail business of Future Group had come under more stress. Sales in many of its premium food sales arm Food hall and Brand Factory had come to a near halt in the lockdown, which lasted more than two months.

Future Retail had signed another deal with e-commerce giant Amazon. As part of the deal, Amazon had in 2019 acquired 49 per cent stake in Future Coupons, which has around seven per cent stake in the holding firm of Future Retail, in a deal worth nearly INR 2,000 crore.

After Future’s agreement with Reliance, Amazon said the deal was a violation of a non-compete clause and a right-of-first-refusal pact it had signed with the Future Group. The deal also required Future Group to inform Amazon before entering into any sale agreement with third parties.

On its part, the Future Group has said that it had not sold any stake in the company, and was merely selling its assets and had therefore not violated any terms of the contract.