The appeals tribunal directed the company founded by Jeff Bezos to deposit the ₹200 crore penalty imposed by CCI within 45 days. Amazon can, however, challenge the order in the Supreme Court.
“Amazon has failed to make fair, frank, and forthright disclosures pertaining to the 2019 deal with Future Group. The tribunal is in agreement with the CCI view and thereby directs Amazon to deposit ₹200 crore as penalty," the tribunal bench led by Justice M. Venugopal ruled in an oral pronouncement.
The bench said that the tribunal completely agrees with the competition watchdog that Amazon furnished limited disclosures about its acquisition of strategic rights and interests in Future Retail Ltd.
In its order, the tribunal said that “In so far as the aspect of non-disclosures by Amazon, this tribunal aptly points out that Amazon was required to reveal ‘economic and strategic’ purpose, including business objective and rationale for each of the parties to the combination and the manner in which they are intended to be achieved of the combination."
The tribunal pointed out that Amazon, however, said that it was investing in Future Coupons Pvt. Ltd (FCPL) with a view to strengthen and augment the business of Future Coupons including the marketing and distribution of loyalty cards, corporate gift cards and reward cards to the corporate customer and unlock the value in the company.
“It seems that Amazon has an uphill task ahead of itself as it would need to convince the Supreme Court to interfere with the concurrent findings of the CCI and the NCLAT," said Sandeep Bajaj, managing partner, PSL Advocates and Solicitors.
In January, Amazon had approached the NCLAT against the CCI order where the competition authority had put the approval for the Amazon and Future Coupons deal in abeyance.
The antitrust watchdog fined Amazon ₹200 crore for misrepresenting and suppressing information while seeking regulatory approval in 2019 to buy a stake in Future Coupons.
According to CCI’s December order, disclosing significant facts and particulars is critical because they allow the commission to understand the commercial and economic dimensions of the merger and determine an appropriate framework for assessing the matter. The watchdog also said that the misleading submissions, false statements, omissions, and suppression of material particulars, facts, and documents have denied and disabled the commission from assessing the effects of the actual combination, with a particular focus on the actual intended objectives.
The move follows a Delhi high court judgement on 5 January that suspended Amazon’s arbitration proceedings in Singapore against estranged partner Future Group for contract violations.
The legal tussle between Amazon and Future Group is over the sale of Future’s retail assets to Mukesh Ambani’s Reliance Industries Ltd for ₹24,713 crore. Reliance Industries called off the deal in April after it failed to secure necessary approvals from the lenders of Future Group.
The deal was being opposed by Amazon, arguing that its investment of ₹1,400 crore in Future Coupons, one of the promoters of Future Retail, allowed it to block the asset sale to Amazon’s competitors.
Future Group approached competition watchdog to revoke the approval given for its 2019 deal with Amazon as part of the legal tussle.
At present, the US giant has filed an intervention application before the Mumbai bench of the National Company Law Tribunal to restrict banks from disposing of or alienating Future Group’s assets.
Bajaj said that the alienation of Future Group’s assets would now depend on the lenders of Future Group. “It has been widely reported that the group has entered into troubled waters with its lenders wherein the lenders are inclined to initiate insolvency proceedings against the group. If the Corporate Insolvency Resolution Process is initiated in the matter of Future Retail, the provisions of the Insolvency and Bankruptcy Code, 2016, shall prevail and the resolution applicant, if any, which eventually acquires the company shall gain control over the assets of Future Group," Bajaj said.
