Amazon’s Battle With Reliance For India Retail Supremacy Became A Legal Jungle: Here’s How

For more than a year, Amazon and India’s Future Group have been locked in a complicated legal impasse that halted the sale of Future’s assets to rival Reliance Industries of the US firm worth $3.4 billion (about Rs 24,700 crore). Given – which has no end. ,

The controversy, seen as the key to deciding to get the upper hand in one of the world’s fastest growing retail markets, is here.

What caused the controversy?

In 2019, Amazon and Future became the number two players in India behind market leader Reliance, when the US company invested $200 million (about Rs 14,796 crore) in the gift vouchers unit of the Indian conglomerate.

Amazon argues that the deal came with certain non-compete clauses that barred Future from selling retail assets to some rivals, including Reliance, run by one of India’s richest men, Mukesh Ambani. The deal also included clauses for settlement of any disputes under rules set by the Singapore International Arbitration Centre. But in 2020, Future – badly hit by the COVID-19 pandemic – decided to sell assets to Reliance.

Amazon then approached intermediaries in Singapore and successfully blocked the sale. The two sides have challenged each other with lawsuits in Indian courts, including the Supreme Court because the “seat of arbitration” remains in New Delhi and Indian law governs the proceedings.

What are Amazon and Future called?

Amazon argues that various agreements it signed with Future in 2019 gave it exclusive rights over Future’s retail properties, some of which it also expected should eventually ease India’s rules for foreign investors. A possible Future-Reliance deal “destroys” the latter possibility, the US company has said.

Future denies any wrongdoing, saying Amazon is illegally seeking to take control of Future’s retail business. Future Retail – the group’s flagship retail arm – says it is facing liquidation and more than 27,000 of its employees could be jobless if the Reliance deal fails.

What is the big picture?

At stake is whether Amazon, with Reliance’s 1.3 billion subscribers, can become a major force in the $900 billion (approximately Rs.6658449.78 crore) retail market.

Reliance Group has operations, including 1,100 supermarkets, while Future has over 1,500. Both are rapidly expanding into e-commerce, but the future deal will immediately boost Reliance’s retail footprint, which has attracted foreign investors in the business.

For its part, Amazon has invested $6.5 billion (about Rs 48081 crore) in India, which it counts as a major growth market where it is a major e-commerce player. The Future partnership had already allowed Amazon to promote its online portfolio of grocery delivery by integrating the Indian company’s stores on its website.

Keeping the future away from Reliance chimes in with Amazon’s efforts to counter billionaire Ambani’s growth plans. In a confidential legal filing, Amazon said that Reliance’s consolidated position with Future would “further restrict competition in the Indian retail market”.

How did India’s Antitrust Agency get involved?

Future complained to India’s antitrust agency, the Competition Commission of India (CCI), that Amazon was making false and contradictory submissions about the intent of the 2019 deal.

Amazon said it never withheld any information, but last December the CCI suspended its approval of the 2019 deal with Future, saying it was a “deliberate act on the part of Amazon to suppress the true scope of the deal.” Design” and its interest in Future’s retail. businesses.

While Amazon argues that the CCI acted beyond its powers, Future says the US company no longer has any right to assert its claims because the 2019 deal now lacks regulatory approval.

In a setback to the US giant, the Delhi High Court this month stayed the Singapore arbitration proceedings between the two sides in light of the Indian antitrust decision.

The arbitration has since been halted, but Amazon has appealed the decisions in Indian courts that are yet to hear the case.

© Thomson Reuters 2021

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