Future tells Competition Commission that Amazon misled regulator – The Financial Express

Clipped from: https://www.financialexpress.com/industry/future-tells-competition-commission-that-amazon-misled-regulator/2369129/

In the latest letter, the independent directors alleged that Amazon’s representation that it does not have any direct or indirect shareholding in FRL is also contradicted by their own internal records.In the latest letter, the independent directors alleged that Amazon’s representation that it does not have any direct or indirect shareholding in FRL is also contradicted by their own internal records.

Independent directors of Future Retail (FRL) have shot off another letter to the Competition Commission of India (CCI), alleging that Amazon’s submissions to the watchdog were completely “contradictory” to its earlier internal correspondence and statements given to courts. The directors reiterated their plea for revocation of approval given by CCI for Amazon’s investment in Future Coupons Private Ltd (FCPL) two years ago.

“In spite of the fact that in their mind, the rights acquired by Amazon over FRL were strategic, Amazon has chosen to represent these rights as ‘investment protection rights’ to CCI,” the directors of FRL stated in the letter dated November 10.

In an earlier letter dated November 7, FRL’s independent directors had made a similar demand. In both the letters, the independent directors had alleged that the e-commerce major had made false statements for getting regulatory approvals.

In the latest letter, the independent directors alleged that Amazon’s representation that it does not have any direct or indirect shareholding in FRL is also contradicted by their own internal records.

They quoted a letter written by Amazon India legal head to Amazon CEO, mentioning a 25% premium over regulatory price of FRL was being paid on account of the strategic rights and call options.

“Due to the call option and the strategic rights being at or above the prevailing market price, we currently estimate a $41 million P&L loss at sign,” it added.

Originally, Amazon was to invest directly in FRL through the Foreign Portfolio Investment (FPI) route, but due to restrictions in Indian foreign investment laws the company decided to use a “twin-entity investment” structure. That is, Amazon was to invest in FCPL and FCPL would acquire a 9.82% of FRL, the letter added.

Also Amazon’s representations that FRL’s shareholders agreement was negotiated by the promoters, FRL and FCPL, independent of the investment by Amazon, is not supported by their internal records, it alleged.

The letter, a copy of which was sent to BSE and Sebi, also alleged that Amazon gave different and contradictory reasons to courts and CCI for the investments.

The independent directors in their letter to CCI, stated that these were found after they examined the pre-contractual negotiation related records in connection with Amazon’s investment in FCPL. The records were part of the court filing in the Amazon-Future Group legal tussle.

The legal issues cropped up after Amazon opposed the merger of FRL with Reliance Industries entered into in August 2020, citing a 2019 non-compete agreement between Amazon and Future Group.

In August 2020, RIL sealed a deal to acquire the retail business of Future Group for `24,713 crore to fortify its retail play in India.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s