Future Retail’s independent directors have shared new documents with the Competition Commission of India (CCI) to establish that disclosures by Amazon before the antitrust watchdog in 2019 contradicted the American e-commerce company’s own internal communications at the time.

In 2019, Amazon had acquired a minority stake in Future Coupons through which it got a stake in Future Retail. While Amazon has been arguing that its pact with Future Coupons was linked to the deal with Future Retail, the independent directors (ID) of Future Retail have produced internal e-mails claiming that Amazon’s submissions to the Commission were “contrary” to Amazon’s internal strategy.

For example, when Amazon filed for approval of the deal with Future Coupons (FC) in 2019, it stated that the investments were being made because of the “unique business model and strong growth potential.” The IDs have alleged that the actual intent of the deal was to overcome the foreign direct investment norms wherein an international retail company cannot invest directly in an Indian retail chain.

“Due to Amazon’s concerns arising out of Press Note 2 (PN2), the investment structure was changed to Amazon investing in a twin-entity investment structure i.e. Amazon would invest in Future Coupon Private Limited (FCPL) and FCPL will acquire 9.82 per cent of Future Retail,” the IDs said adding that “The CCI has to revoke the approval granted for Amazon’s investment,” in FCPL. If CCI revokes the approval given to Amazon’s 2019 deal with FCPL retrospectively then it may lose the claims over Future Retail thereby opening the doors for Reliance Industries. Future and Reliance had announced a ₹24,500-crore deal in 2021 which has been blocked by Amazon citing the 2019 deal.

The IDs further alleged that the price paid for the FCPL shares was determined by Amazon on the basis of FRL’s valuation and that there was “no valuation ascribed or carried for FCPL business per se” and “FCPL is just used as a vehicle for an investment in FRL”.

“The number of equity shares of Future Retail to be held by Future Coupons has been calculated such that Amazon can indirectly hold the same number of shares of Future Retail that Amazon would have acquired if Amazon had directly invested ₹1,400 crore in Future Retail at a price per share representing a 25 per cent premium on the minimum regulatory price prescribed for issuance of fresh shares of a listed entity under Indian law,” the letter from IDs stated.

Last week too Future Retail’s directors had written a letter to the CCI alleging that Amazon was inconsistent with its stance in its dealings with judicial and regulatory authorities.

Related Topics