Future Group stocks surge 20% after CCI suspends 2019 Amazon deal

AMAZON-COM-INDIA-FUTURE-RELIANCE
A man walks inside the Big Bazaar retail store in Mumbai, November 25, 2020. File Photo: REUTERS/Niharika Kulkarni

Bengaluru: Shares of India's Future Group companies surged 20% on Monday after the country's antitrust agency suspended Amazon.com's 2019 deal with the group in a potential blow to the US e-commerce giant's attempts to block the sale of Future's retail assets to Reliance.

Amazon has for months successfully used the terms of its $200 million investment in Future to block the Indian retailer's attempt to sell retail assets to Reliance Industries for $3.4 billion.

The ruling by the Competition Commission of India (CCI) could have far-reaching consequences for Amazon's legal battles with now estranged partner Future.

The regulator ruled that the US company had suppressed information while seeking regulatory approval on an investment into the Future Group two years ago.

The regulator's 57-page order said it considers "it necessary to examine the combination (deal) afresh," adding its approval from 2019 "shall remain in abeyance" until then.

The CCI's order said Amazon had "suppressed the actual scope" of the deal and had made "false and incorrect statements" while seeking approvals.

With the 2019 Future deal's antitrust approval now suspended, it could dent Amazon's legal position and retail ambitions, while making it easier for Reliance - the country's largest retailer - to acquire number two player Future, people familiar with the dispute said.

The CCI also imposed a penalty of around 2 billion rupees ($27 million) on the US company, adding that Amazon will be given time to submit information again to seek approvals, the CCI added.

Future Group, however, is unlikely to cooperate with Amazon if it tries to reapply for antitrust clearance after the CCI's decision, a source with direct knowledge told Reuters.

The Indian company is also set to take CCI's Friday decision before various legal forums to argue that Amazon has no legal basis to challenge its asset sale, the source added.

The dispute over Future Retail, which has more than 1,500 supermarket and other outlets, is the most hostile flashpoint between Jeff Bezos' Amazon and Reliance, run by India's richest man Mukesh Ambani, as they try to gain the upper hand in winning retail consumers.

Hit by the COVID-19 pandemic, Future last year decided to sell its retail assets to Reliance for $3.4 billion, but Amazon managed to block the sale successfully through legal challenges.

Amazon cited breach of contracts by Future, arguing that terms agreed in 2019 to pay $200 million for a 49% stake in Future's gift voucher unit prevented its parent, Future Group, from selling its Future Retail Ltd business to certain rivals, including Reliance.

The CCI review of the deal started after Future, which denies any wrongdoing, complained, saying that Amazon was making contradictory statements before different legal forums about the intent of the 2019 transaction.

The comments posted here/below/in the given space are not on behalf of Onmanorama. The person posting the comment will be in sole ownership of its responsibility. According to the central government's IT rules, obscene or offensive statement made against a person, religion, community or nation is a punishable offense, and legal action would be taken against people who indulge in such activities.