Domestic traders body Confederation of All India Traders (CAIT) has filed a fresh petition before the Competition Commission of India seeking investigations into US e-commerce behemoth Amazon’s 51 per cent acquisition in More Retail stores.
Per this, as various legal experts argue, it could possibly lead to revocation / imposition of penalty on Amazon if the CCI finds that various details on the capital structure/ indirect control exhibited by Amazon on More Retail were suppressed while seeking the approval in 2019.
CAIT has stated in its petition that the acquisition mode of More Retail stores in India by Amazon is akin to its deal with Future Group and indirectly holding a controlling stake in retail companies of India, which is in violation of the Press Note -2 issued by the Government of India , prohibiting foreign companies to buy any stake in a retail company in the country.
In 2019, CCI did approve of the Amazon-More deal, albeit seeking some clarifications from Witzig Advisory LLP, that in-turns owns More Retail Limited, over the interference/ stake of Amazon in More Retail. Also in December last year, the CCI revoked the approval of the deal between Amazon-Future Coupons, and had imposed a Rs 202 crore penalty on Amazon over alleged misrepresentation of facts by the e-commerce giant.
The traders body also said in its plea that the e-tailer has supressed key information when it comes to capital structure in the company Samara Alternate Investment Fund (Samara AIF) that owns 51 per cent equity in Witzig Advisory.
This twin-entity structure, as per the CAIT, has been adopted by Amazon to bypass various regulations that prohibit any e-commerce marketplace from owning the inventories sold on the marketplace.
The traders body further claimed that it has seen the emails exchanged between Rakesh Bakshi, head - legal and corporate affairs and associate general counsel, Amazon India, to Jeff Bezos, wherein the former says that the contours of Amazon-More Retail deal are similar to that of its indirect acquisition of Future Retail.
It claimed that Amazon made investments through Samara Alternate Investment Funds (SAIF) through which it also offered to help Future Group.
SAIF owns 51 per cent equity in More Retail’s parent, Witzig Advisory.
BT has reached out to Amazon for a comment and the story will be updated when the e-tailer responds.
Copyright©2023 Living Media India Limited. For reprint rights: Syndications Today