India’s antitrust agency has accused Amazon.com Inc. of hiding facts and providing false information when it applied for approval to invest in a Future Group unit in 2019, according to a Reuters letter to the U.S. Commerce giant showed.
The letter complicates Amazon’s bitter litigation with Future Group over the Indian company’s decision to sell its retail assets to Reliance Industries – a matter now before the Indian Supreme Court.
Amazon has argued that the terms of its 2019 deal to pay $ 192 million for a 49% stake in Future’s gift card unit prevent parent company Future Group from selling its Future Retail Ltd business to Reliance.
In the June 4 letter, the Competition Commission of India (CCI) said that Amazon was hiding factual aspects of the deal by not disclosing its strategic interest in Future Retail when it applied for approval for the 2019 deal.
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“The representations and behavior of Amazon before the commission amount to misrepresentation, false information and the suppression or / and concealment of essential facts,” it says in the letter.
It also found that its review of the submitted comments had been prompted by a complaint from the Future Group.
In the four-page letter, a so-called “Show Cause Notice”, the CCI asked Amazon why they should not take action and punish the company for providing false information.
AMAZON RELIABLE PROVEN TO THE CONCERNS OF THE CCI
Amazon has not yet responded as the letter has not been made public, according to a source with direct knowledge of the matter who declined to be identified. Amazon said in a statement to Reuters that it had received a letter, committed to complying with Indian law and would extend its full cooperation to the CCI.
“We are confident that we can dispel the concerns of the Chamber of Industry and Commerce,” it said.
Representatives for Future and the CCI did not respond to Reuters’ request for comment. Vaibhav Choukse, a competition law specialist and partner at J. Sagar Associates, said it was rare for the CCI to issue such a notice and that if the CCI was not satisfied with Amazon’s response it would result in a fine and even could lead to a review of the deal.
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“The CCI has extensive powers that include instructions on how to resubmit the application for approval and even to withdraw approval in exceptional circumstances,” said Choukse.
In the approval order 2019 of the Chamber of Commerce and Industry, it says that their decision is “revocable if the information provided turns out to be incorrect at any point in time”. Future Retail stocks rose after Reuters released details of the letter, taking profits in trading to nearly 5% on Thursday afternoon.
WHAT’S THE DISPUTE?
The dispute over future retail, with more than 1,500 supermarkets and other outlets, is the most hostile focal point between Jeff Bezos’ Amazon and Reliance, run by India’s richest man Mukesh Ambani as they try to get the upper hand to win over the country’s consumers.
Amazon is also facing a host of other challenges in India, a major growth market where it has made $ 6.5 billion in investments, including a separate IHK Investigating alleged practices that small businesses claim has harmed them.
It also faces additional regulations that would restrict private label sales and prohibit the US company from allowing its affiliates to list products on its website.
The CCI letter compared three sets of filings Amazon filed in 2019 with later filings on other legal forums and said they were “contradicting”.
In particular, Amazon said it was interested in investing in Future’s coupon unit as one that would fill gaps in the Indian payments industry. However, the letter states that Amazon announced on other legal forums that the basis of its relationship with Future Coupon were certain special rights it had received through Future Retail.
“Amazon has kept silent about its strategic interest” in Future Retail, the letter says, adding: “This interest and the purpose of the merger … were not disclosed to the Commission despite specific requirements.”
The CCI also opposed a section of a filing in which Amazon had told the regulator that it had nothing to do with a specific legal agreement that two future companies had signed with each other days before their deal in 2019. However, Amazon later claimed in front of an arbitrator that the agreement was an “integral part” of the transaction, the letter said.
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