Future Group shares rally after CCI suspends Amazon's 2019 deal with Future

The competition commission of India (CCI) on Friday suspended Amazon.com's 2019 deal with Future Group following a review of allegations that the U.S. e-commerce giant had concealed information while seeking regulatory approval.

Following the update, shares of Future Group companies rallied. Future Supply Chain Solutions (up 20%). Future Retail (up 20%), Future Enterprises (up 18.18%), Future Consumer (up 16.84%), Future Lifestyle Fashions (up 16.40%), and Future Market Networks (up 5%) advanced.

The antitrust regulator also imposed a penalty of Rs 200 crore on Amazon for failing to notify the details of its 'combination' as required in law. It also imposed a separate penalty of Rs 2 crore for suppressing the actual scope and purpose of the combination, a term used in competition law for acquisition, merger or amalgamation of two or more enterprises.

The CCI said it considers "it necessary to examine the combination (deal) afresh," adding its approval from 2019 "shall remain in abeyance" until then. A penalty of Rs 200 crore has also been imposed on Amazon. "In exercise of the powers conferred under sub-section (2) of Section 45 of the Act, the Commission hereby directs Amazon to give notice in Form II within a period of 60 days from the receipt of this order, and, till disposal of such notice, the approval granted vide Order dated 28th November, 2019, in Combination Registration No. C-2019/09/688, shall remain in abeyance," the CCI order read.

Amazon had made false and incorrect representations and concealed/suppressed material facts in contravention of the provisions of the Act, the CCI order added.

Amazon has 60 days to pay the monetary penalty. It has the same period to notify the combination afresh with "true, correct and complete information".

On 29 August 2020, Reliance Industries (RIL)'s subsidiary Reliance Retail Ventures (RRVL) announced acquisition of the retail & wholesale business and the logistics & warehousing business of the Future Group as going concerns on a slump sale basis for Rs 24,713 crore.

RIL said that the acquisition of the retail, wholesale and supply chain business of the Future Group complements and makes a strong strategic fit into RIL's retail business.

Later in October 2020, Amazon sent a legal notice to Future Group citing its non-compete agreement with the Kishore Biyani-led chain. According to the notice, the Future-RIL transaction cannot go ahead without Amazon's approval in view of the non-compete clause entered earlier with the retail group.

Amazon has about 5% stake in FRL after it bought 49% in Future Coupons for Rs 1,500 crore in August 2019.

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