In a major setback to Amazon, the National Company Law Appellate Tribunal (NCLAT) on Monday rejected the US e-commerce giant’s appeal against an antitrust suspension of its investment deal with Future Group, saying the retailer had not made full disclosures at the time of seeking approval.
The NCLAT upheld a Rs 200 crore penalty on Amazon by the Competition Commission of India (CCI) and asked the e-commerce giant to deposit the same in 45 days.
The appellate tribunal ratified the CCI findings that Amazon didn’t make full disclosures regarding the deal with Future Retail subsidiary — Future Coupons Pvt Ltd.
In its order, NCLAT said, “Amazon has not made full, whole, forthright and frank disclosures of relevant materials. It had furnished only limited disclosures pertaining to acquiring its strategic rights and interest in FRL (Future Retail Ltd)” and executing the commercial contract.
“In this regard, this appellate tribunal is in complete agreement with the view arrived at by the first respondent (CCI),” said the NCLAT bench comprising Justice M Venugopal and Ashok Kumar Mishra.
The CCI on December 17, 2021, levied a Rs 200 crore penalty on Amazon and suspended its deal with Future, stating that the US firm deliberately suppressed the actual scope and purpose of the 2019 investment and made false and incorrect statements.
Amazon had challenged the decision, arguing that it had not concealed any information.
Amazon.com NV Investment Holdings LLC (Amazon), a direct subsidiary of Amazon.com Inc, had in 2019 acquired 49 per cent shareholding in FCPL, which in turn held 9.82 per cent interest in FRL.
Citing its indirect shareholding in FRL, Amazon had opposed the sale of its retail assets to Reliance Industries for Rs 24,713 crore. The CCI order had stated that Amazon had not disclosed its interest in FRL while seeking approval for its investment in FCPL.
Amazon has been directed to pay the penalties and file a fresh Form 2 within 45 days.
In August 2019, Amazon had agreed to purchase 49 per cent in unlisted Future Coupons, which owns 7.3 per cent equity in listed Future Retail through convertible warrants, with the right to buy into the flagship Future Retail after a period of 3 to 10 years.
The deal size was around Rs 1,400 crore. FRL is presently facing an insolvency petition before the Mumbai bench of the National Company Law Tribunal by its lender after it committed defaults.
NCLAT concluded its hearing in April this year, over Amazon’s plea after all parties filed revised notes of submissions along with relevant citations before the registry.
Apart from Amazon’s plea, the appellate tribunal had also reserved the order on two other petitions in the matter filed by the Confederation of All India Traders (CAIT) and All India Consumer Products Distributors Federation (AICPDF).
FRL was part of the 19 group companies operating in retail, wholesale, logistics and warehousing segments, which were supposed to be transferred to Reliance Retail as part of a 24,713 crore deal announced in August 2020.
The deal was called off by the billionaire Mukesh Ambani-led Reliance Industries Ltd in April.