E-commerce giant Amazon has been on CCI’s radar for a while now. In the latest development between the CCI and Amazon, the former slapped the latter with a ₹202 crore fine and a suspended deal.
The competition watchdog’s 57-page order says that Amazon “suppressed the actual scope” of its deal with Future Coupons. CCI added that the company even made “false and incorrect statements” when seeking the Future Coupons deal approval.
What Is The Deal Between Future Group And Amazon?
Amazon entered a ₹2,000 crore deal with Future Group in 2019. Under this arrangement, Amazon acquired a 49% stake in Future Coupons. Future Coupons, in turn, holds a little over 7% stake in Future Retail.
Then in 2020, Reliance announced it is acquiring the logistics, warehousing, and wholesale business from Future Group for ₹24,713 crores. Amazon objected to the deal the dragged Future Group to court.
According to Amazon, the Future Group and Reliance deal violate the non-compete clause. Amazon and Future Coupons entered their original deals only to prevent Future Group from selling the retail business elsewhere.
Why Did CCI Fine Amazon?
The Competition Commission of India slapped Amazon with the ₹202 crores fine for not entirely disclosing the scope of its deal with Future Coupons. CCI approved this deal with the condition that it can be ended if Amazon’s details are incorrect.
In this case, Amazon never really revealed its plans for Future Group in its deal to acquire Future Coupons. That’s what backfired on the e-commerce giant, leading to the CCI suspending the Amazon & Future Coupons deal.
Before the action, Amazon warned CCI that the suspension of this deal would discourage foreign investment. The company added that it would allow Reliance to further restrict competition. However, after CCI’s decision, the Future Group and Reliance deal are likely to move forward.
Amazon has been taking a lot of flak in India lately. We are facing an antitrust case due to the creation of Cloudtail. The platform even ended its relations with this special seller after the competition watchdog started a probe.
Earlier in September, Amazon founder and CEO Jeff Bezos made it to the cover of Panchjanya. The right-wing magazine dubbed Amazon as ‘East India Company 2.0’, accusing it of its malpractice.