CCI CLEARS RELIANCE-FUTURE DEAL DESPITE OBJECTIONS
E-com giant Amazon had requested the antitrust regulator to consider the SIAC order against the deal
MUMBAI: Antitrust body Competition Commission of India (CCI) on Friday cleared oil-to-telecom giant Reliance Industries’ bid to buy Future group’s retail assets even as Amazon.com sought to block the potential deal, alleging contractual violations by the latter.
The approval is a setback for Amazon, which has argued that a 2019 agreement it inked with Future prevented the group from selling its retail assets to some parties.
MUMBAI: The Competition Commission has approved Reliance’s proposed acquisition of retail, wholesale, logistics and warehousing businesses of Future Group.
The ₹24,713 crore deal that would boost Reliance Industries’ fast growing retail business was announced in August.
In a tweet on Friday, the regulator said it has approved “acquisition of retail, wholesale, logistics & warehousing businesses of Future Group by Reliance Retail Ventures Limited and Reliance Retail and Fashion Lifestyle Limited”.
Deals beyond a certain threshold require approval of the Competition Commission of India (CCI), which keeps a tab on unfair business practices across sectors. Amazon had approached the CCI and the country’s market regulator Securities and Exchange Board of India (Sebi), urging them to consider the Singapore International Arbitration Centre’s order and not approve the deal.
As per the notice submitted to the CCI, there are at least seven target entities. They are Future Enterprises, Future Consumer Ltd, Future Lifestyle Fashions Ltd, Future Retail Ltd, Future
Market Networks Ltd, Future Supply Chain Solutions Ltd and Futurebazaar India Ltd and its subsidiaries.
“The Transferor Companies consists of several listed and unlisted companies, primarily engaged in retail, wholesale, logistics and warehousing businesses. “These businesses operate on a pan-India basis, and include retail operations across segments such as food and grocery, apparel, footwear and accessories, other merchandise, etc,” the notice said.
Meanwhile, e-commerce major Amazon has opposed the deal between Future Group and Reliance.
Last year, Amazon bought 49% stake in one of Future Group’s unlisted firms, with the right to buy into the listed flagship Future Retail Ltd. Amazon has claimed that its contract with the unlisted Future Coupons Ltd barred a transaction with a number of persons and companies, including Reliance.
Amazon is seeking to derail India’s biggest retail acquisition using an agreement that gave it an indirect foothold in the owner of retail chain Big Bazaar, lawyers and analysts said.
The lawyers and analysts said Amazon invested not in FRL but in a company owned and controlled by Kishore Biyani namely
Future Coupons Ltd (FCL), which was carrying on the business of wholesale trading of goods and merchandise and marketing and distribution of corporate gifts cards, loyalty cards, and reward cards to corporate customers.
But that the August 22, 2019 shareholders’ agreement gives FCL critical control rights over the management and affairs of FRL, including a bar on selling any retail asset without its approval and a bar on selling assets to any restricted persons.
This, they said, tantamounts to Amazon getting ‘control rights’ in FRL even though the law does not provide for that.
Amazon on the other hand feels it didn’t have any operational control over FRL and the agreement only tries to protect its investments. The agreement was disclosed to Sebi as well as CCI.
The ‘control’ was in violation of the law as FDI is permitted in multi-brand retail with government approval and with a lot of restrictions such as 50% of the funds being invested in backend infrastructure, mandatory local sourcing of goods and services, a bar on retail trading by means of e-commerce and multi-brand retail being allowed only in certain states, people familiar with the matter said.