NCLAT upholds CCI order against Amazon-FCPL deal
15 June 2022
The National Company Law Appellate Tribunal (NCLAT) on Monday dismissed an appeal by US e-commerce giant Amazon against the anti-trust regulator Competition Commission of India (CCI’s) decision against the approval granted to Amazon’s acquisition of 49 per cent stake in Future Coupons Private Ltd (FCPL) as well as the levy of the Rs200 crore penalty.
FCPL is a promoter of Future Retail Ltd (FRL). FRL was part of the 19 group companies operating in retail, wholesale, logistics and warehousing segments, which were supposed to be transferred to Reliance Retail as part of a Rs24,713 crore deal announced in August 2020. But the Mukesh Ambani-led Reliance Industries Ltd had called off that deal in April after Future Group's secured creditors rejected the agreement.
Dismissing Amazon’s plea against the verdict of the CCI, the NCLAT said power of CCI to grant approval (to a deal) includes the power to keep the order in abeyance if it believes Amazon has breached the terms of the approval order.
The NCLT - comprising of a two-member bench of Justice M Venugopal and Ashok Kumar Mishra, upheld the the CCI findings and directed Amazon to pay the penalty of ? 200 crore imposed by the fair trade regulator within 45 days from Monday.
"This appellate tribunal is in complete agreement" with the CCI, the two-member bench said.
NCLAT’s refusal to grant any relief for Amazon and dismissal of its plea comes as a fresh setback for the online retailer’s efforts to usurp Future Group’s retail business.
The CCI through order in December 2021 had kept in abeyance the approval it had given to Amazon’s acquisition of 49 per cent stake in FCPL and had asked Amazon to apply afresh for approval of the deal. The regulator has also imposed a penalty of Rs200 crore on Amazon for ‘a deliberate design on it part to suppress the actual scope and purpose of the deal’.
The CCI had to review its 2019 decision to approve the Amazon-Future Coupon deal after it was pointed out by different stakeholders, including an independent director of Future Retail as well as by the Confederation of All India Traders (CAIT), that Amazon had not clearly disclosed to CCI its intention to take a strategic control over Future Retail Ltd (FRL), a company in which Future Coupons holds 9.82 per cent, through its deal with FCPL.