In a major blow to Amazon, the National Company Law Appellate Tribunal (NCLAT) upheld the ₹200 crore penalty imposed on e-commerce giant Amazon by the Competition Commission of India (CCI).
The NCLAT order pronounced in the court today directs Amazon to pay the penalty worth ₹200 crore in 45 days. It supported the CCI findings that Amazon didn't make full disclosures regarding the deal with Future Retail subsidiary Future Coupons Pvt Ltd.
The competition watchdog on December 17, 2021, had levied a ₹200 crore penalty on Amazon and suspended the Amazon-Future deal that was approved in 2019, citing Amazon deliberately suppressed the actual scope and purpose of the combination.
Amazon.com NV Investment Holdings LLC (Amazon), a direct subsidiary of Amazon.com Inc, had acquired 49% shareholding in Future Coupons Private Limited (FCPL), which in turn holds 9.82% of the shareholding in Future Retail Limited (FRL).
Citing its indirect shareholding in Future Retail, Amazon had opposed its stake sale worth ₹24,713 crore to Reliance Industries. The CCI order said Amazon had not disclosed its interest in Future Retail, while seeking approval for its investment in Future Coupons. At that time, the competition regulator had asked Amazon to pay the penalty in 60 days.
“Amazon failed to notify FRL shareholder agreement (SHA) and the commercial arrangements, as parts of the combination between the parties, and suppressed the actual purpose and particulars of the combination, as discussed above, in contravention of the obligation contained in sub-section (2) of Section 6 of the Act read with Regulation 5 and sub-regulations (4) and (5) of Regulation 9 of the Combination Regulations,” the CCI order said.
Meanwhile, in a massive blow to Future Group as well, it had rejected Reliance Retail’s proposed takeover scheme in April 2022. Lenders including SBI, BoB and others had rejected the slump sale proposal to sell the Future group’s retail, wholesale and logistics assets to Reliance Retail Ventures after Reliance lowered the deal value. The company now faces insolvency proceedings by its lenders.
Following the cancellation of the deal, Future group companies having exposure to bank loans -- Future Consumer, Future Retail, and Future Enterprises -– also face the risk of insolvency proceedings. These group companies owe more than ₹28,000 crore to banks as of January 31, 2022.
Bank of India has already filed insolvency proceedings against Future Retail for non-payment of dues. The bank lent ₹5,322.32 crore as of March 31, 2022, as per the lender’s petition to the National Company Law Tribunal (NCLT).
The Future Retail stock is trading 4.97% up at ₹8.45 on the NSE today. The stock has been down 83.10% in the year-to-date period, primarily due to the company's debt situation and failure to complete the deal with Reliance Retail.
