20 January 2022
The Competition Commission of India (“CCI”) in November 2019 had granted an approval to Amazon for the acquisition of 49% (forty-nine per cent) stake in Future Coupons Pvt Ltd (“FPCL”). However, on 25March 2021, FPCL filed an application before the CCI alleging that Amazon had made false representations and repressed material information regarding the purpose of its investment in FCPL and consequent rights over Future Retail Limited.
The CCI, upon perusal of the application, prima facie observed that Amazon had misrepresented and concealed material facts in the original application and accordingly issued a show cause notice to Amazon.
The CCI, in its findings observed that, Amazon had stated in the original application that the purpose of the investment in FPCL was to create a long-term value for the company, provide return on its investment and enhance Amazon’s existing investments in the payments landscape in India. However, on the basis of internal documents, the CCI observed that the rationale behind the transaction was to become the single largest shareholder of Future Retail Limited at the time when foreign direct investment opens up in the retail sector.
Accordingly, by way of its order dated 17 December 2021, the CCI reasoned that Amazon had concealed the actual scope of the investment in 2019 and stayed the same until the disposal of a fresh application which was to be filed by Amazon.
Further, this is the first case in which the CCI has suspended its approval. The CCI also imposed a penalty of approximately INR 2 billion on Amazon for misrepresentation of material facts and non-notification of interconnected steps in the notice for its acquisition in FPCL.
Please click here to read the CCI order.
