The National Company Law Appellate Tribunal (NCLAT) on Monday rejected the plea filed by e-commerce giant Amazon challenging the Competition Commission of India’s orders to spend the approval of its major deal with Future Coupons.
The bench comprising Justice M Venugopal and Justice Ashok Kumar Mishra upheld the observations of fair trade regulator CCI and directed it to pay a Rs 200 crore penalty within 45 days.
The bench stated, “the appellant Amazon has not made full, whole, forthright and frank disclosures of relevant materials. It had furnished only limited disclosures pertaining to acquiring its strategic rights and interest in FRL (Future Retail Ltd) and executing the commercial contract.”
“In this regard, this appellate tribunal is in complete agreement with the view arrived at by the first respondent (CCI),” the bench added.
In December 2021, the Competition Commission of India suspended its approval given in 2019 for Amazon’s deal to acquire 49 percent stake in Future Coupons Pvt Ltd (FCPL).
The regulator had noted that Amazon suppressed information while seeking clearances for the transaction back then. It had also slapped a fine of Rs 202 crore.
This amount included Rs 200 crore penalty for Amazon for not notifying the combination in the requisite terms and two penalties of Rs one crore each for suppressing the actual scope and purpose of the combination.
However, NCLAT modified the CCI orders and directed, “This appellate tribunal based on the relevant facts and circumstances of the case, mainly the availability of the competitions in the market and financial health of the industry… imposes a penalty of Rs 50 lakh each as per Sections 44 and 45 of the competition act 2002.”
But NCLAT upheld the Rs 200 crore penalty imposed on Amazon.com NV Investment Holdings LLC (Amazon) – a direct subsidiary of Amazon.com Inc – for failure to notify the combination in the requisite terms.
As regarding the non-furnishing of the information, namely the appellant (Amazon) omission for the lapse and for failure to notify the combination as per the obligatory required under section 6 (2) of the Act, the bench noted.
“Being responsible and accountable in not giving notice as required under this regard, this tribunal to secure the ends of justice, is not displacing the imposition of penalty of Rs 200 crore levied upon Amazon by CCI in the impugned order since the same is fair and sensible as per section 43 (a) of the act,” the bench said.
FCPL is a promoter of Future Retail Limited. Amazon had opposed the FRL’s deal to sell assets to Reliance Retail as part of the 24,713-crore deal. The deal has now been called off.
Besides Amazon’s plea, the fair trade regulator has also reserved order on two other petitions in the matter filed by the Confederation of All India Traders (CAIT) and All India Consumer Products Distributors Federation (AICPDF).
FRL was part of 19 group companies operating in retail, wholesale, logistics and warehousing segments. As per the 2020 deal worth 24,713-crore, these were supposed to be transferred to Reliance Retail. However, the deal was called off by Mukesh Ambani-led Reliance Industries Ltd in April.