Amazon.com has asked the country’s market regulator to investigate Future Retail for insider trading, a letter seen by Reuters showed, as it seeks to prevent its business partner from becoming part of rival Reliance’s empire.
The firm has been pressing the Securities and Exchange Board of India (Sebi) to review Reliance's August deal to buy retail, logistics, and other assets from Future Group for $3.4 billion including debt.
Amazon argues it had a 2019 agreement with Future, which prevented the Indian group’s retail assets from being sold to certain parties including Reliance Industries (RIL).
The letter to Sebi, dated November 8, alleges Future Retail disclosed to RIL price sensitive details of an injunction granted by a Singapore arbitrator to block the deal.
The spat is being closely watched as a key test of whether Indian firms, courts and regulators will respect arbitration decisions made in accordance with overseas arbitration rules, and adds to headaches for Amazon in India, which is also dealing with antitrust challenges.
The injunction was granted on October 25 (Sunday) and was reported by media with Amazon issuing a short statement saying it welcomed the decision. Later that evening, RIL said, in a stock exchange filing, that it had been informed of the arbitration order and would enforce its rights to complete the deal with Future without delay.
It is this October 25 filing, which Amazon argues in its 20-page letter that indicates RIL was privy to “price sensitive” details of the injunction. RIL “was not a party to the arbitration proceedings ... and could have received details related thereto only from FRL (Future Retail) or its Promoters,” said the letter.
RIL and Sebi did not respond to requests for comment. Amazon declined to comment on the letter.
Future Retail, which has argued that Amazon’s agreement last year was only with a separate Future Group unit, issued a statement to the stock exchange on the morning of October 26, saying it was examining the arbitration order and that it believed the order would have to be tested by Indian law.
Amazon on Wednesday told the Delhi High Court that the emergency arbitration award against Future Retail by the Singapore arbitrator was “a valid order” and the e-commerce major had the right to inform statutory bodies about it.
Senior advocate Gopal Subramanium, appearing for Amazon, said the suit filed by Future Retail was “doubtful” and not maintainable.
Subramanium said Future Retail participated in the proceedings before the emergency arbitrator and also urged it not to pass an interim order till an arbitrator is appointed on behalf of the Future Group. “Therefore, it cannot now say that the EA's interim decision was invalid and not binding on it,” he said.