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CCI slaps Rs 200 crore penalty on Amazon, temporarily suspends Future Coupons 2019 deal

Competition Commission of India (CCI) has temporarily suspended the Amazon-Future Coupons agreement from 2019 in a major roadblock for the US-based e-commerce platform in its long-running dispute with India’s Future Group.

Amazon logo displayed on a smartphone

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Amazon’s whole argument for blocking the $3.4 billion (~Rs 24,500 crore) merger between Future Retail and Reliance was based on the belief that Future Group is barred from dealing with Reliance due to its indirect stake in Future Retail (via the aforementioned deal).

The unprecedented decision by India’s antitrust regulator CCI might have far-reaching repercussions in the legal dispute between the e-commerce conglomerate and Future Group. The agency has alleged “concealing of facts” in a 57-page CCI report. The agency stated that the violations of competition law stemmed “from a deliberate design on Amazon’s part to suppress the actual scope and purpose of the combination.”

In addition to the temporary suspension of the deal, CCI has slapped a fine of Rs 200 crore on Amazon. Stating, “As regards the failure to notify combination in terms of the obligation cast under Section 6(2) of the Act, Section 43A of the Act enables the Commission to impose a penalty, which may extend to one percent of the total turnover or the assets, whichever is higher, of such a combination. Accordingly, for the above-mentioned reasons, the Commission hereby imposes a penalty of Rupees Two Hundred Crore upon Amazon.”

The factors cited include Amazon’s willful design to conceal the actual objectives and scope of the combination, as well as false and incorrect representations made by the US-based e-commerce giant by concealing/suppressing relevant details, such as failing to identify and notify strategic stake in Future Retail. The complainants, Future Coupons Private Ltd (FPCL) and the Confederation of All India Traders (CAIT), accused Amazon of failing to disclose its intentions to indirectly control the parent company, Future Retail Ltd, through its acquisition of a 49 percent ownership in FPCL.

Future Retail’s independent directors alleged the e-commerce conglomerate of violating India’s FDI and FEMA regulations last month. Amazon not only denied the allegations but also argued to CCI that it does not have the legal power to dismiss a deal that has already received clearance. The CAIT issued a statement on December 15 in response to Amazon’s argument. It stated the conglomerate should not have actually participated in any of the CCI processes “if it believes the agency does have the power to revoke a deal.”

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