Amazon moves Supreme Court challenging CCI's decision on Future Coupons

Amazon moves Supreme Court challenging CCI's decision on Future Coupons

The matter will be taken up by the apex court on 19 September

Amazon.com NV Investment Holdings has approached the Supreme Court assailing the order of the National Company Law Appellate Tribunal (NCLAT), which rejected Amazon's plea. Amazon had challenged the decision of the Competition Commission of India (CCI) to keep the approval granted to the e-commerce giant's deal with Future Coupons Private Limited (FCPL) in abeyance.

The NCLAT, in the June 2022 impugned order, upheld the direction of the CCI to Amazon to pay Rs.200 crores penalty under the Competition Act, 2002 within 45 days.

The matter was recently listed before a bench comprising Justice Dinesh Maheshwari and Justice M.M. Sundresh. The court asked the parties to submit short notes of their submissions within a week.

Amazon had notified the combination to acquire 49 percent shareholding in FCPL along with other transactions. These were:

• Issuing of 9,183,754 voting equity shares of FCPL to Future Coupons Resources Private Limited (FCRPL).

• Transfer of 13,666,287 shares of Future Retail Limited (FRL) held by FCRPL to FCPL.

• Acquisition of the subscription shares representing 49 percent of the total issued, subscribed and paid-up equity share capital of FCPL (on a Fully Diluted Basis) by Amazon, by way of a preferential allotment.

Seemingly, Amazon informed CCI, that it did not have any direct or indirect shareholding in FRL, and it would not directly acquire any rights in FRL. It had only limited investor protection rights in FCPL to protect the value of its investment in it. These rights could be exercised through FCPL and not directly by Amazon. Based on the information, the CCI granted approval to the combination vide its November 2019 order.

Meanwhile, the Confederation of All India Traders (CAIT), an organization of retailers, complained to the CCI against the Amazon-Future deal.

FCPL filed an application before the CCI under the Competition Act on the acquisition of 49 percent shareholding in FCPL by Amazon. It apprised the Commission that Amazon had initiated arbitration proceedings to transfer the assets of FRL, a company in which FCPL holds 9.82 percent of the shareholding.

It invoked arbitration proceedings in Singapore to halt FRL's deal with the Reliance Group. There were related litigations pending before the constitutional courts. It was alleged that Amazon's stands in the arbitration proceedings and constitutional courts on its investments in FCPL were contrary to its representations and submissions made before the CCI. Allegations of false representation and suppression of material facts were raised before the CCI.

The CCI viewed that Amazon failed to identify and notify FRL Share Holding Agreement as a part of the 'combination' in terms of the Combination Regulations. And that Amazon concealed its strategic interest over FRL and made false and incorrect representations and concealed/suppressed material facts in contravention of the provisions of the Act.

Amazon was, therefore, served with a show-cause notice.

Eventually, in its December 2021 order, the CCI concluded that Amazon had suppressed, "the actual purpose and particulars" of the 2019 deal and sought to establish false representation and suppression of material facts". It was observed that it was necessary to examine the deal afresh and hence, until then, its approval "shall remain in abeyance."

The CCI also imposed a penalty of Rs.200 crores on Amazon for failing to identify and notify the FRL Shareholders Agreement as a part of the deal, an obligation under the Competition Act.

On Amazon's appeal, the NCLAT upheld that Amazon had intentionally concealed the 'real ambit and purpose' of the 'combination.'