US e-commerce giant Amazon has stepped up pressure on Indian offline retailer Future Group for violating the terms of a 2019 agreement and entering into a deal with the Reliance Group, an oil-to-retail conglomerate owned by India’s richest man Mukesh Ambani.
Amazon has once again approached the stock market regulator Securities and Exchange Board of India urging it to suspend the review of Future Group’s 247 billion rupees (US$3.37 billion) deal in August to sell its retail, wholesale, logistics and warehousing units to Reliance Retail Ventures, the group’s retail wing. This included the sale of its supermarket chain Big Bazaar, premium food supply unit Foodhall and fashion and clothes supermart Brand Factory’s retail and wholesale units.
The US e-tailer had earlier raised the issue with the Singapore International Arbitration Centre, which is expected to pass its verdict later this month. The arbitrator had in October passed an interim award in favor of Amazon, barring Future Group from taking any step to dispose of its assets.
Amazon has a small stake in Future Retail, after it acquired a 49% stake in Future Coupons in 2019. The Indian retailer’s groceries and fashion products are sold on Amazon’s website, while Future stores also act as local warehouses serving the US giant’s food supply chain. It has alleged that by entering into a deal with Reliance, Future Group had breached their agreement, which provided them the first right of refusal during a stake sale. There is also a non-compete clause that prevents Future Group from approaching Amazon’s competitors.
In its letter to the market regulator, Amazon wants suspension of “review of the Impugned Transaction as well as the scheme involving the Impugned Transaction, and not granting any no-objection” for the Future-Reliance deal, Press Trust of India reports. The company also urged the market regulator to direct the Indian Stock Exchanges not to issue any no-objection/approval letter to the Future Group. Amazon has written a series of letters to regulators and the bourses, starting with its complaint on October 3. This is the sixth instance of the e-commerce giant writing to Securities and Exchange Board of India on this issue.
It has also filed an appeal with the Delhi High Court against its December 21 order. A single-judge bench of the court had upheld the interim award by Singapore International Arbitration Centre in favor of Amazon as legal, but it also declared the Future-Reliance deal to be legal and left the final decision to the regulatory authorities before whom the deal is pending approval.
Amazon has contended that having upheld the Singapore arbitrator’s interim order, the court could not have in the same order made observations inconsistent with the premises of the arbitrator. It alleged that Future Group has been relying on these observations to mislead regulators to grant approval to the deal.
Meanwhile, Future Group founder and CEO Kishore Biyani has said that the company approached Amazon many times seeking help during the cash crunch caused by the Covid-19 crisis, but the e-commerce giant did not oblige. The Indian retailer’s 1,700 outlets were badly hit by the two-month countrywide lockdown from March 25 to contain the spread of Covid-19. It has warned that failure to close the Reliance deal could lead to the company’s liquidation and more than 29,000 employees losing their jobs.