Why CCI suspended Amazon's deal with Future Coupons

The combination pertained to Amazon acquiring 49% stake in Future Coupons through three levels of transactions

The Competition Commission on Friday suspended its more than two-year-old approval for Amazon's deal with Future Coupons and imposed a Rs 202 crore penalty on the e-commerce major for failure to furnish true and complete details about the transaction.

In the 57-page order, the regulator said that the contraventions of the competition law have arisen "from a deliberate design on the part of Amazon to suppress the actual scope and purpose of the combination".

The combination pertained to Amazon acquiring a 49 per cent stake in Future Coupons through three levels of transactions.

Also Read | Amazon says India revoking Future deal would boost Reliance, hurt competition

The CCI said that Amazon had failed to disclose true and complete details of the purpose of the combination, which were required to be given while seeking approval.

"... Amazon had supressed the actual scope of the combination and had made false and incorrect statements in relation to the BCAs (Business Commercial Agreements), which are intertwined into the scope and purpose of the combination," the order said.

"Further, Amazon had misrepresented that its decision to pursue the combination was based on the unique business model of FCPL (Future Coupons Pvt Ltd), and that FRL (Future Retail Ltd), a company with strong financials and futuristic outlook, is relevant to the combination only from the perspective of financial strength to FCPL," CCI said.

The watchdog also pointed out that it has no hesitation to hold that the conduct of Amazon amounts to "suppression and misrepresentation of the purpose of the combination, which is a material particular", adding that those are in contravention of competition norms.

Also Read | Amazon alleges Rs 11,300 crore diverted from Future Retail

"Similarly, the rights over FRL that were considered as strategic in the internal correspondence of Amazon, were represented as mere investor protection rights.

"Such repeated assertions, contrary to their actual purport, amount to statements that are false in a material particular, in contravention of the provisions contained in clauses (a) and (b) of Section 44 and clause (a) of subsection (1) of Section 45 of the Act," the order said.

CCI said that it clearly highlights that the rights of Amazon over FRL "are at the heart of the negotiations and the need for FRL SHA (Shareholding Agreement) was to achieve the said objective of the combination".

Apart from not giving a single notice covering all the inter-connected steps of the combination, Amazon also failed to give true and complete disclosure with respect to the substance of its combination. "... the FRL SHA was pursued to ensure that the business of FRL become a strategic asset for Amazon to expand and enhance its ultra-fast delivery services," CCI said.

The parties involved in the combination were Amazon.com NV Investment Holdings LLC (Amazon) -- a direct subsidiary of Amazon.com Inc -- and Future Coupons.

Amazon had initiated arbitration proceedings against Future Group with respect to the proposed transfer of assets of Future Retail. Future Coupons told CCI that submissions made by Amazon before the regulator and the arbitrator were contradictory. Subsequently, CCI issued a show-cause notice to Amazon in June this year.

"We are reviewing the order passed by the Competition Commission of India, and will decide on next steps in due course," an Amazon spokesperson said.

With PTI inputs

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