It looks like India’s richest man can’t have it all, especially when another heavyweight billionaire is involved.
Today (Aug. 6), the supreme court of India upheld an emergency order that Amazon had obtained from the Singapore International Arbitration Centre (SIAC) in October 2020 restraining Future Group from selling its retail business to Mukesh Ambani’s Reliance Industries (RIL).
The firm founded by Jeff Bezos had alleged a violation of contract when Future Group struck the $3.4 billion (Rs24,713 crore) deal with Reliance Retail last year. Amazon had claimed a conflict as it owns a 49% stake in Future Coupon, a promoter entity of the Kishore Biyani’s retail chain.
This is a significant decision because Reliance has a lot to lose if the deal is cancelled. Future Group’s retail business includes 1,800 stores of grocery chains mart Big Bazaar, Easyday, and Foodhall, and fashion outlets Central and FBB, spread across 420 Indian cities, which would give its new owner a big edge. Plus, Future Group was also selling its wholesale, logistics, and warehouse businesses under the agreement.
The apex court’s ruling stops the Indian retailers from merging, spelling bad news for both.
Today’s decision has come after a long wait for Amazon.
After the October 2020 emergency order, Future Group denied wrongdoing and stayed its course. In November 2020, the deal got the nod from the Competition Commission of India (CCI) and in January this year, the Security and Exchanges Board of India (SEBI) also approved it. In February, a New Delhi court revoked a previous court decision that blocked the deal, and Amazon had to file an appeal in the country’s top court.
In a letter to employees in February, Biyani said, “Amazon is playing the dog in the manger, going all out to create a ruckus through a concerted and coordinated media campaign, primarily fuelled by leaking of selective and misleading information to misguide media.” Without the Reliance deal, Future Group feared it could be staring at liquidation.
Amazon isn’t leaving unscathed. The glare on the legal tussle set alarm bells ringing for India’s competition watchdog. In June, CCI accused Amazon of concealing facts and making false submissions when it sought approval for the 2019 investment in the Future Group unit.
But whatever the outcome of the regulator’s investigation, Amazon’s legal win is no doubt a defining moment in Indian e-commerce. Reliance Industries’ stocks slipped 2% and Future Group’s plummeted 10%.