Future Group Deal: CCI’s Order Is Entirely Unsustainable, Says Amazon
Amazon argued that the competition regulator failed to follow a fair procedure before suspending the 2019 approval.
The Competition Commission of India’s suspension order did not abide by due and fair procedure and should be set aside, Senior Advocate Gopal Subramanium said as he concluded his arguments for Amazon.com NV Investment Holdings.
The U.S. e-commerce major has challenged the the CCI's order which suspended approval to its investment in Future Coupons Pvt. in 2019.
In December, the competition regulator had suspended the approval to Amazon’s 2019 deal with Future Coupons and imposed a Rs 200-crore penalty saying it failed to adequately identify and notify its strategic interest in Future Retail Ltd.
Amazon has challenged this order before the National Company Law Appellate Tribunal.
In the hearings so far, Amazon has questioned the CCI's power to revisit the 2019 approval, examine the submissions made before other courts, and to cherry-pick lines from the filing documents.
In his arguments on Thursday, Subramanium emphasised that the CCI’s suspension order failed to examine the transaction through the test of substantial disclosure.
There is a theory in law of substantial revelation and compliance but the competition regulator lost sight of it completely.Gopal Subramanium, Senior Advocate (appearing for Amazon)
The conduct of a party is determined on the basis of substantial disclosure and Amazon on its part had disclosed all the relevant agreements, he said.
For instance, Subramanium told the appellate tribunal, Amazon had disclosed the availability of a call option that would count as a disclosure of having a "foot-in the door" of the Indian retail sector.
The CCI order does not mention that overlaps were explained, competition assessment was done and noted in the approval order. The Future Coupons shareholders agreement also mentions that call-option could be exercised by Amazon U.S. or any of its subsidiaries.Gopal Subramanium, Senior Advocate (appearing for Amazon)
The reference is to a clause in the shareholders agreement under which Amazon was granted a call option allowing it to acquire all or part of the promoters’ shareholding in Future Retail, which could be exercised between the third and tenth years in certain circumstances subject to applicable law.
Subramanium also questioned the competition regulator’s conclusion that Amazon had failed to notify the relevant documents for establishing the strategic partnership between Amazon and Future Retail.
Was there an intention to misrepresent? What would I gain? I have assessed Future Retail even when I am not getting in FRL.Gopal Subramanium, Senior Advocate (appearing for Amazon)
While concluding his arguments, Subramanium said in a penal proceeding the competition regulator must reflect on the intention of the parties and such a discernment was a necessary condition. "The ability to discern, the capacity of discernment is absent in the order."
The NCLAT will hear the case next on Monday when Senior Advocates Arun Kathpalia and Amit Sibal will continue the arguments for Amazon.