A letter to the US e-commerce giant seen by Reuters showed that Indian antitrust regulators accused Amazon of concealing facts and submitting false materials when seeking approval for investment in the Future Group division in 2019.

This letter complicates the fierce legal battle between Amazon and Future Group over the Indian company’s decision to sell its retail assets to Reliance Industries-an issue that is now being heard in the Supreme Court of India.

Amazon argued that in its 2019 transaction, it agreed to pay US$192 million (approximately Rs 14.3 crore) for the purchase of 49% of Future’s gift certificate division. The terms prevented its parent company, Future Group, from selling its Future Retail business to Reliance.

In the letter dated June 4, the Competition Commission of India (CCI) stated that Amazon did not disclose its strategic interest in Future Retail when seeking approval for the 2019 transaction, thereby hiding the factual aspects of the transaction.

The letter said: “Amazon’s statements and actions before the Committee constitute false statements, false statements and suppression or/and concealment of important facts.” It also pointed out that Future Group’s complaint prompted it to review the submitted materials.

In this four-page letter, the so-called “Notice of Display Reason,” CCI asked why Amazon should not take action and penalize companies that provided false information.

According to a source with direct knowledge of the matter, Amazon has not yet responded, and the source declined to be named because the letter has not been made public.

Amazon said in a statement to Reuters that it has received a letter promising to comply with Indian laws and will fully cooperate with CCI.

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“We believe we will be able to address CCI’s concerns,” it said.

Representatives of Future and CCI did not respond to Reuters’ request for comment.

Vaibhav Choukse, a competition law expert and partner at J. Sagar Associates, said that CCI rarely issues such notices. If CCI is not satisfied with Amazon’s response, it may result in fines or even review transactions.

“CCI has extensive powers, including instructions to resubmit applications for approval, and even revoke approvals under special circumstances,” Choukse said.

CCI’s 2019 Approval Order stated that its decision “if at any time it is found that the information provided is incorrect, it shall be revoked”.

After Reuters released the details of the letter, shares of Future Retail rose, expanding by nearly 5% in Thursday afternoon trading.

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The dispute over Future Retail, which has more than 1,500 supermarkets and other outlets, is the most hostile flashpoint between Jeff Bezos’ Amazon and Reliance run by India’s richest man Mukesh Ambani Because they are trying to win over consumers in the country.

Amazon faces many other challenges in India. India is an important growth market. It has pledged to invest US$6.5 billion (approximately Rs. 48,410 crore), including a separate CCI survey investigating small businesses claiming to have hurt them. behavior.

In addition, it faces the prospect of more regulations that will restrict the sale of its own brands and prohibit the American company from allowing its affiliates to list products on its website.

The CCI letter compared the three sets of submissions submitted by Amazon in 2019 with subsequent submissions to other legal forums, calling them “contradictory.”

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In particular, it stated that Amazon has explained its interest in investing in Future’s coupon division as a solution to the gap in the Indian payment industry. However, the letter stated that Amazon had disclosed on other legal forums that the basis of its relationship with Future Coupon was certain special rights it obtained against Future Retail.

The letter stated that “Amazon concealed its strategic interest in future retail” and added: “This interest and the purpose of the merger…Despite specific requirements, it has not been disclosed to the committee.”

CCI also opposed a section of a document submitted in which Amazon told regulators that it had nothing to do with a specific legal agreement signed by two Future entities a few days before the 2019 transaction. But Amazon later claimed that the agreement was a “part of the transaction” before the arbitrator, the letter said.

© Thomson Reuters 2021