CCI suspends Amazon-Future Coupons deal; imposes penalty of Rs 202 cr

India's competition watchdog Competition Commission of India (CCI) has suspended the deal-- which it approved in 2019 -- between US e-commerce behemoth Amazon and Future Coupons Private Limited (FCPL). CCI has also issued a 60 days' notice to Amazon, accusing it of suppressing vital information while seeking an approval for its Rs 1400 crore deal with FCPL, in which it acquired a 49 per cent stake. FCPL is a promoter entity of Future Retail Limited (FRL). The watchdog has also imposed a Rs 202 crore penalty on Amazon.

The CCI pointed out in its order that the failure to disclose the actual purpose of the Amazon-FCPL deal in 2019 has amounted to violations of the sub-section (2) of the Section 6 of the Competition Act and Regulation 5 and sub-regulations (4) and (5) of Regulation 9 of the Combination Regulations.

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

"As regards failure to notify combination in terms of the obligation cast under Section 6(2) of the Act, Section 43A of the Act enables the Commission to impose a penalty, which may extend to one percent of the total turnover or the assets, whichever is higher, of such a combination. Accordingly, for the above-mentioned reasons, the Commission hereby imposes a penalty of INR Two Hundred Crore upon Amazon," the CCI stated in its order.

With respect to the non-disclosure of the information, CCI said that although Amazon had mentioned that FCPL has a shareholding in Future Retail Limited, it had stated while seeking approval, that the e-tailer is not aligned towards any commercial interests in FRL and is only interested in leveraging the FCPL's business for strengthening payment services in India and globally.

It also referred to various litigations and arbitration proceedings between Future Group and Amazon where the e-tailer has pledged its investor protection rights in FCPL to restrain FRL from entering into a deal with Reliance Industries. The CCI observed in its order that Amazon's statements before the CCI and courts were contravening in nature.

The CCI has been carrying out an investigation into the Amazon-FCPL deal after an appeal by the Future Group and a subsequent application from the traders' body, Confederation of All India Traders (CAIT). The counsel appearing on behalf of CAIT has alleged that Amazon has not disclosed the interests behind its investment in FCPL and is trying to forego the foreign investment rules to enter the multi-brand retail sector of India, which will create an unhealthy competition for the small retailers.

Meanwhile, CAIT's General Secretary, Praveen Khandelwal said in a statement that the CCI order is a landmark judgement. "CCI is first concrete result of more than two years rigorous efforts of CAIT for bringing misdeeds of Amazon into lime light . At last, the CAT has been belled. They said that it is an indication for not only Amazon but for other foreign funded e-commerce companies to stop violating the law, rules and FDI policy of the Government," he added.

The battle between Amazon and the Kishore Biyani-led FRL erupted last year after the latter announced a merger with Mukesh Ambani's Reliance Retail. The US e-commerce behemoth alleged that the merger violated a non-compete agreement it had with FRL, subsequent to which Amazon dragged the matter to Singapore International Arbitration Centre (SIAC).