Amazon's non-disclosure a fraud on CCI, regulator tells Supreme Court

CCI told the Supreme Court that Amazon's failure to disclose deal information under the Competition Act amounted to fraud, as the SC hears its appeal against a ₹200 crore penalty

Amazon’s non-disclosure of information on combinations under the Competition Act, 2002 is a fraud on the Competition Commission of India (CCI), the market regulator told the Supreme Court on Wednesday.

 

The apex court was hearing Amazon’s challenge to a CCI order imposing a fine of ₹200 crore on the company for alleged non-disclosure of information on combinations under the Act.

 

Amazon had moved the Supreme Court against the CCI ruling suspending approval for its 2019 investment in Future Group. The order was passed on January 10, 2023.

 

Appearing for CCI, Additional Solicitor General N Venkataraman said that when Amazon sought approval, it presented the deal as relating to its coupon business and not its retail business.

   

“Approving a combination for coupon business is different from approving a combination for retail business. You cannot obtain approval for coupon business and then claim it covers retail,” he argued before the court.

 

He stressed the need for transparency before the market regulator. The arguments are likely to continue on Thursday.

 

In June this year, the Singapore International Arbitration Centre (SIAC) awarded ₹23.7 crore in damages, besides arbitration and litigation costs, to Amazon in its long-running dispute with the Kishore Biyani-led Future Group.

 

The three-member tribunal held that Future Group had breached its contract with Amazon by entering into a transaction with Reliance. It directed 11 promoters and parties of the Future Group, including Kishore Biyani, to pay the amount with interest from March 9, 2022.

 

The dispute arose from Future Group’s decision to sell its Big Bazaar retail business to Reliance Retail, a subsidiary of Reliance Industries.

 

In 2022, Amazon argued before the Supreme Court that its ₹1,400 crore investment in Future Group did not permit the latter to sell assets to certain companies, including Reliance.

 

Amazon sought ₹1,436 crore damages, citing Future Retail Limited’s (FRL) deteriorating value. SIAC, however, ruled that while Amazon was entitled to damages for breaches of the Future Coupons Private Limited (FCPL) shareholders’ agreement, it rejected the full ₹1,436 crore claim.

 

The tribunal said that though Amazon had fulfilled its contractual obligations, it would not have recovered its entire investment due to FRL’s deteriorating business value and the Covid-19 pandemic. Awarding the full damages would unfairly shield Amazon from commercial loss.

 

Amazon was awarded ₹77.3 crore and S$68,550 as litigation cost.

 

In August 2020, Future Group, facing financial distress and debt of around ₹22,000 crore, decided to sell its wholesale, logistics and warehousing businesses to Reliance Industries for ₹24,713 crore. Amazon objected, citing violation of contractual obligations.

 

Amazon initiated arbitration proceedings against Future Group in October 2020 and obtained an emergency arbitration award pausing the Future–Reliance deal.

 

Both Amazon and Future Group subsequently approached the Delhi High Court, the Supreme Court of India and the National Company Law Appellate Tribunal in their legal battle.