NCLAT dismisses Amazon’s appeal against CCI order suspending futures deal

Author: Nishu June 13, 2022

NCLAT dismisses Amazon's appeal against CCI order suspending futures deal


Supports ₹200-crore. Amazon fined by CCI

Supports ₹200-crore. Amazon fined by CCI

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 has Full disclosure was not made at the time. Seeking approval.

The NCLAT also upheld the ₹200 crore fine imposed by the Competition Commission of India (CCI) on Amazon and asked the e-commerce giant to deposit it in 45 days.

This supported the CCI’s findings that Amazon did not make full disclosures about the deal with Future Retail Subsidiary – Future Coupons Pvt. Ltd. (FCPL).

In its order, the NCLAT said, “Amazon has not made a full, complete, clear and unambiguous disclosure of relevant materials. It had made only limited disclosures relating to its strategic rights and acquiring interest in FRL (Future Retail Limited)”. and executing commercial contracts.

“In this regard, this Appellate Tribunal fully agrees with the view of the first respondent (CCI),” the NCLAT bench of Justices M. Venugopal and Justice Ashok Kumar Mishra said.

Competition watchdog fined Amazon ₹200 crore on December 17, 2021 and suspended its deal with Future, saying the US firm knowingly suppressed the true scope and purpose of the 2019 investment and falsely and falsely made statements. Amazon challenged this decision, saying that it did not hide any information.

Amazon.com NV Investment Holdings LLC (Amazon), a direct subsidiary of Amazon.com Inc., acquired a 49% stake in FCPL in 2019, in return for a 9.82% interest in FRL.

Amazon had opposed the sale of its retail assets to Reliance Industries for ₹24,713 crore, citing its indirect stake in FRL.

The CCI order stated that Amazon had not disclosed its interest in FRL while seeking approval for its investment in FCPL.

The NCLAT upheld the view of the CCI but reduced the separate penalty of ₹1 crore each to ₹50 lakh under sections 44 and 45.

Amazon has been directed to pay the penalty and file a new Form 2 within 45 days.

“This appellate tribunal is based on the relevant facts and circumstances of the case, mainly the availability of competition in the market and the financial position of the industry … imposing a fine of Rs 50 lakh each in accordance with sections 44 and 45 of the Competition Act 2002, The NCLAT directed Amazon to pay ₹1 crore within 45 days calculated from the date of passing of the judgment.

But the NCLAT upheld the ₹200 crore fine imposed on Amazon.com NV Investment Holdings LLC (Amazon) – a direct subsidiary of Amazon.com Inc – for failure to notify the combination in the requisite terms.

“With respect to non-submission of information, namely, the appellant (Amazon) omission for default and failure to notify the combination as required under section 6(2) of the Act (The Competition Act, 2002), this The Tribunal is of the view that the appellant failed to provide relevant information on the Amazon combination.

“Being responsible and accountable for not giving necessary notices in this regard, this tribunal, in order to secure the end of justice, is not dispensing with the order of CCI to enforce the fine of ₹ 200 crore imposed on Amazon Because it is proper and sensible as per section 43(a) of the Act,” the NCLAT said while pronouncing its order orally in the virtual court.

A detailed decision in this matter is still awaited.

In August 2019, Amazon agreed to buy 49% in unlisted Future Coupons, which owns 7.3% equity in listed Future Retail through convertible warrants, after a period of 3 to 10 years. Right to buy in retail. The deal size was around ₹1,400 crore.

FRL is currently facing an insolvency petition before the Mumbai bench of the National Company Law Tribunal after its lender defaulted.

The NCLAT concluded its hearing on Amazon’s plea in April this year, when all parties filed revised notes of submissions with relevant citations before the registry.

Apart from Amazon’s plea, the appellate tribunal had also reserved order on two other petitions in the matter filed by Confederation of All India Traders (CAIT) and All India Consumer Products Distributors Federation (AICPDF).

FRL was part of 19 group companies operating in the retail, wholesale, logistics and warehousing segments that were to be transferred to Reliance Retail as part of the ₹24,713 crore deal announced in August 2020.

The deal was canceled in April by billionaire Mukesh Ambani-led Reliance Industries Ltd.

Commenting on the development, CAIT welcomed the NCLAT order and said that any move to lure Indian e-commerce and retail trade by anyone will not succeed under any circumstances.

“The NCLAT decision is a testament to CAIT’s stand that was highlighted by Amazon on persistent anti-competitive practices and violations of the law, including ways to enter deep discounting, B2C e-commerce and retail trading space. More Retail Limited and FRL,” the trading body said in a statement.

13 June, 2022, 10:30 pm

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Monday, 13th June 2022

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