Amazon Loses Against Competition Regulator At NCLAT

The National Company Law Appellate Tribunal has upheld the competition regulator's view that Amazon.com NV Investment didn't make adequate disclosures while seeking approval for its 2019 investment in Future Coupons Pvt.—promoter entity of Future Retail Ltd.

Amazon had not made full, fair, forthright and frank disclosure of relevant materials and had furnished only limited details for disclosure pertaining to its acquisition of strategic rights in Future Retail, the appellate tribunal said.

It directed the U.S. e-commerce major to deposit Rs 200 crore—penalty imposed by the CCI—within 45 days. "The penalty is fair and sensible one." Until Amazon files a detailed form with the regulator, the CCI's approval to the 2019 transaction will continue to be on hold. Amazon has 45 days to file a fresh form, the bench said. The NCLAT's detailed order is awaited.

In December, the Competition Commission of India had suspended the approval to Amazon’s deal with Future Coupons and imposed a Rs 200-crore penalty saying that there was a failure to adequately identify and notify Amazon’s strategic interest in Future Retail.

Amazon has challenged this order in the NCLAT. Amazon’s lawyer Senior Advocate Gopal Subramanium based his challenge around:

• The CCI’s power to revisit the 2019 approval.

• The power to examine the submissions made before other courts.

• The lack of due and fair procedure before the CCI suspended its earlier approval.

In response, the CCI had stated that the scope of its 2019 approval was only the coupons, gift and payment business and FRL’s role in that was of a coupon issuer. Arguing for the regulator, Additional Solicitor General N Venkataraman said the CCI was told that the purpose of the transaction was Amazon’s interest in the coupons business of Future Coupons, but the real intent was to gain control over Future Retail—the company which runs retail brand stores, including the Big Bazaar chain. There was misrepresentation and concealment which culminated into a fraud, the CCI had told the NCLAT.

Future Group too had defended the CCI's action saying the regulator had the power to suspend Amazon's 2019 deal with Future Coupons. “An order obtained by false pretense can be revoked. Anything obtained by fraud stands on a very shaky foundation,” senior advocate Harish Salve had said while arguing for Future Coupon.

According to Senior Advocate Ramji Srinivasan, also arguing in favour of Future Coupons, the law makes it mandatory for the acquirer in a combination to notify and disclose fairly and fully. “The substance of the combination should have been disclosed.”