Tussle Of Giants, Amazon-Future And Reliance-Future Deal Explained

Amazon, last year, had acquired a 49% stake in Future Coupons, the promoter entity of Future Retail, fora deal valued up to $200 million or Rs 1500 crore. This August, Reliance Retail announced to acquire the Retail & Wholesale Business and the Logistics & Warehousing Business from the Future Group. Amazon called the sale a violation of a non-compete clause.

Delhi High Court on Monday allowed Amazon.com Inc. to oppose Future Group's Rs 24,713 crore asset sale to Mukesh Ambani's Reliance Retail but left it to the regulators to decide on the deal. It was a mixed ruling for the e-commerce giant, Amazon, fighting Asia's richest man Mukesh Ambani for dominance in one of the world's largest retail markets. What has happened so far:  Last year, Amazon had acquired a 49% stake in Future Coupons, the promoter entity of Future Retail, for a deal valued up to Rs 2,000 crore. As part of the deal, Amazon was given a 'call' option, which enabled it to exercise the possibility of acquiring all or portion of Future Coupon's promoter, Future Retail's shareholding in the company, within 3-10 years of the agreement. In August, Reliance Retail announced to acquire the Retail & Wholesale Business and the Logistics & Warehousing Business from the Future Group as going concerns on a slump sale basis for lumpsum aggregate consideration of Rs 24,713 crore, subject to adjustments as set out in the composite scheme of arrangement. Soon after Reliance announced the deal to buy Future Retail, Amazon called the sale a violation of a non-compete clause and a right-of-first-refusal pact it had signed with the Future Group. According to Amazon, the deal required Future Group to inform Amazon before entering any sale agreement with third parties. Future Group has said that it had not sold any stake in the Future Coupon and was selling its assets and had therefore not violated any terms of the contract. Amazon moved to Emergency Arbitrator of the Singapore International Arbitration Centre (SIAC), which restrained Future Group from taking any steps in furthering the transaction with Reliance Retail. Amazon Inc. wrote to statutory authorities, including market regulator SEBI, competition watchdog the Competition Commission of India (CCI), citing the order by the Emergency Arbitrator is 'binding,' in a move to stall the billion-dollar deal. Despite writing to the antitrust regulator asking it not to approve the Reliance-Future Retail deal, the Competition Competition of India (CCI) approved the transaction on Nov 20. Future Group moved to Delhi High Court, seeking the court to restrain Amazon from writing to statutory authorities in an attempt to stall its deal with Reliance. On Monday, the Delhi High Court dismissed the plea from Future Group seeking to restrain Amazon from interfering in its $3.4 billion asset sale to Reliance. What did the court say?  "The present application is disposed off, declining the grant of interim injunction as prayed for by FRL, however, the Statutory Authorities/Regulators are directed to take the decision on the applications/objections in accordance with the law," said the judgement pronounced by Justice Mukta Gupta on Monday. ABP Network has reviewed the copy of the order. What happens next?  All eyes will be on the market regulator SEBI to approve the deal. According to Reliance sources, SEBI has to approve the scheme submitted by Future Retail so long as the scheme complies with statutory provisions of the Companies Act and other SEBI regulations. Amazon's objections are no longer relevant for approval of the Scheme by SEBI. When asked for comment, an Amazon spokesperson in reply to a query by ABP Network said, “We welcome the verdict of the High Court of Delhi rejecting the interim injunction sought by Future Retail and their claim that the Emergency Arbitrator process is invalid under Indian law.”