AMAZON V RELIANCE
Explainer: Reliance future dealing with reference to future dealing
Amazon has complained to India’s market regulator that its local partner Future Retail Ltd misled shareholders by incorrectly saying it was complying with its contractual obligations to the United States e-commerce giant, a letter seen by Reuters shows.
Amazon is locked in a bitter legal dispute with Future Group, which in August, 2020 sold its retail assets to Mukesh Ambani-led Reliance Industries Ltd for $3.4 billion. The deal, Amazon alleges, breaches 2019 agreements (Between future group and amazon) by the Future groups.
The tussle has strained Amazon’s ties not just with Future Retail group – one of India’s top retailers – but also with Mukesh Ambani, Asia’s richest man, and his Reliance group, which is fast expanding its e-commerce business and threatening retail market companies like Amazon.
Amazon last Sunday won an injunction to halt Future’s deal with Reliance Industries from a Singapore arbitrator both sides had agreed to use in case of disputes. The Indian retailer then said in a news release it had complied with all agreements and “cannot be held back” by the arbitration proceedings.
In the letter to the Securities & Exchange Board of India (SEBI) Chairman Ajay Tyagi on Wednesday, Amazon said Future’s news release and stock exchange disclosures violated Indian regulations, urging the regulator to investigate the matter and not approve the deal.
“Such a disclosure is against public interest, misleads public shareholders … as well as perpetuates a fraud for the benefit of the Biyanis alone,” Amazon letter said, referring to Future’s promoter family led by Kishore Biyani.
Spokesman for Future Group and the Biyani family declined to comment. A Future group source denied Amazon’s allegations, saying there was no question of any fraud or misleading the public or shareholders, without elaborating.
Reliance Industries, which in August bought Future’s retail, wholesale and some other businesses, has said it plans to “enforce its rights and complete the (Future) transaction … without any delay.”
The faceoff comes as Jeff Bezos- led Amazon has already been battling tighter foreign investment rules and antitrust cases in India, which is one of its key growth markets where it has committed investments of approximately $6.5 billion.
Some Indian lawyers have argued the Singapore arbitrator’s order in favour of Amazon is not automatically enforceable and would need ratification by an Indian court. But Amazon believes the order is binding, it told SEBI. The letter asks the regulator to “suspend review” of the deal.
SEBI’s action in the matter “would promote ease of doing business in India by holding listed companies accountable for their dealings,” Amazon’s letter says.
Amazon says the Future-Reliance deal means the U.S. giant will lose the prospect of becoming the single largest shareholder of the Indian retailer, which has an “irreplaceable and widespread network” of more than 1,500 retail stores.
Future has argued it entered into the deal with Reliance because its retail business was severely hit during the COVID-19 pandemic and it was critical to protect all its stakeholders.
The arbitrator, V K Rajah, a former attorney general of Singapore, sided with Amazon in his Oct. 25 2020 order, saying: “The law expects businesspersons to honour their contractual commitments.”
Then the Reliance- future approached the Competition Commission of india, On November 20. 2020, the Competition Commission has approved Reliance Industries Ltd.’s proposed acquisition of retail, wholesale, logistics and warehousing businesses of future group.
This is nearly 25 thousand crore deal that would boost RIl’s fast-growing retail business.
BASIC INFORMATION OF AMAZON AND RELIANCE INDUSTRIES
|Owner||Jeff Bezos||Mukesh Ambani|
|Revenue in Financial Year 2019||280.5 billion U.S. dollars.||1,30,566 Crore|
|Type||Public Company||Public Company|