Future Group Defends CCI’s Suspension Order For Amazon Deal
No bar on the CCI against revoking an earlier approval, Future Coupons argues before the NCLAT.
Citing Amazon’s alleged contrary positions before the competition commission and arbitral tribunal, Future Group in the NCLAT argued that the regulator has the power to suspend the e-commerce platform’s 2019 deal with Future Coupons Pvt.
“An order obtained by false pretense can be revoked. Anything obtained by fraud stands on a very shaky foundation,” senior advocate Harish Salve, arguing for Future Coupons—a promoter group entity of Future Retail Ltd.—said in response to the National Company Law Appellate Tribunal’s query whether the CCI had the power to revisit and suspend its earlier approval.
The relevant question, according to Salve, would be to ask whether there was any express bar on the commission to revisit the approval.
The approval processes, he said, works on strict timelines and there’s a high standard of disclosure on the parties when they come to seek approvals for the transaction. “The only way it [approval process] can work is if you have a high standard of disclosure and with a clear message that you pull a fast one and you will lose your permission.”
“What is more dangerous than a lie is a half-truth,” Salve said.
According to Senior Advocate Ramji Srinivasan, also arguing in favour of Future Coupons, the law makes it mandatory for the acquirer in a combination to notify and disclose fairly and fully. “The substance of the combination should have been disclosed.”
In December, the Competition Commission of India had suspended the approval to Amazon’s deal with Future Coupons and imposed a Rs 200-crore penalty saying that there was a failure to adequately identify and notify Amazon’s strategic interest in Future Retail.
Amazon has challenged this order in the NCLAT. Amazon’s lawyer Senior Advocate Gopal Subramanium based his challenge around:
The CCI’s power to revisit the 2019 approval.
The power to examine the submissions made before other courts.
The lack of due and fair procedure before the CCI suspended its earlier approval.
According to Salve, Amazon made a 180-degree turn in their position before the arbitration tribunal from what they had told the CCI while seeking the approval.
The competition commission was told, Salve said, that the purpose of the transaction was the unique potential of the coupons business whereas the tribunal was told that the rights in Future Retail were an essential part of the transaction.
It was Amazon’s arguments before the tribunal that led to Future Group approaching the competition regulator to tell them what Amazon was arguing before the tribunal, Salve argued.
He also pointed out the CCI’s argument during the hearing where the regulator highlighted Amazon’s internal correspondence related to the transaction.
The regulator cited the emails to argue that the approval was sought for transaction with Future Coupons while the internal discussions demonstrated the real intent of the transaction was Amazon’s interest in Future Retail.
Based on the emails, the CCI argued that the U.S.-based company had paid a 25% premium in the transaction because of the special rights in Future Retail. “I did not know they [Amazon] calculated the price that way. For them it was the share price of FRL,” Salve said.
Srinivasan also pointed to the agreement between Future Coupons and Amazon where it specifically noted that Amazon would not acquire any rights in Future Retail.
The approval which was sought was only for agreements between Amazon and Future Coupons and when Amazon started claiming that the approval was for something else then the commission took note, Srinivasan added.
He argued that the responsibility of disclosing the true scope of the transaction was with Amazon which was never done.
The three emails [Amazon’s internal discussion related to the transaction with Future Group] were not disclosed to the CCI because they were the clearest enunciation of the intention, said Srinivasan.
The appellate tribunal will continue the hearing on Thursday. After Future Coupons, the Confederation of All India Traders will begin its arguments.