Future-Amazon Deal: There Was Misrepresentation And Concealment, CCI Argues

"We stand by the strong words used in our suspension order," the CCI told the appellate tribunal.
<div class="paragraphs"><p>Signage outside the Competition Commission of India headquarters. (Source: BloombergQuint)</p></div>
Signage outside the Competition Commission of India headquarters. (Source: BloombergQuint)

There was misrepresentation and concealment which culminated into a fraud, the Competition Commission of India said on Monday, defending its order suspending the 2019 transaction between Future Group and Amazon.

In December, the competition regulator had suspended approval to NV Investment Holdings LLC's deal with Future Coupons Pvt. 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 Ltd.

Amazon has challenged this order before the National Company Law Appellate Tribunal.

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.

This is plain vanilla control and they should have brought to our notice which they did not.
CCI's Counsel

Venkataraman is responding to Amazon's arguments which revolved around:

The Intent Behind Transaction Was To Control Future Retail: CCI

Venkataraman took the bench through four email conversations between 2018 and 2019 and said that the ‘’substance of the mail showed that they [Amazon] wanted to control and operate the retail market’’.

"The investment was for this purpose which they never disclosed and we were misguided to believe it is meant for the coupons business," Venkataraman said.

The competition regulator also highlighted that Amazon paid 25% premium over the regulatory price of securities on account of strategic rights and call options.

The reference is to the shareholders’ agreement under which Amazon was granted a call option allowing it to acquire all or part of the promoters’ shareholding in Future Retail. The agreement also stated that Future Retail will require prior approval from Future Coupons on certain matters.

Amazon has described the nature of these rights in Future Retail as protective, which do not amount to control in any manner.

Venkataraman contested this.

Emails, discussion papers, presentation between key personnel, and FRL SHA show the real business transaction was not the one for which our approval was sought.
Additional Solicitor General of India N Venkataraman

The Additional Solicitor General also told the bench that the meaning of the CCI's 2019 approval was also discussed during the arbitration hearings between Future Group and Amazon.

The commission objected to discussions and rulings on the meaning of the approval by the arbitral without the regulator being a party to the proceedings.

How can an order passed by the CCI be interpreted as something else? How can arbitral tribunal be super-governing our judgments and passing orders behind our backs?
Additional Solicitor General N Venkataraman

Venkataraman said that during his arguments he will show specific findings where the arbitral tribunal had commented against the regulator. He also acknowledged that CCI had used strong words in its suspension order, which it stands by.

Misrepresentation, wilful omission, suppression, false representation, concealment. Therefore, an act of fraud on CCI. This is what we have alleged and proved.
Additional Solicitor General of India N Venkataraman

The bench will continue hearing CCI's arguments on Tuesday.

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