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Amazon asks SEBI to withdraw approval given to Future–Reliance deal

The letter cited the recent Supreme Court decision on the proposed buyout of Future Group by Reliance Industries.

Amazon has written to the Securities and Exchange Board of India (SEBI) asking the market regulator to withdraw the conditional approval it has given to the proposed buyout of Future Group by Reliance Industries, Economic Times reported on August 30.

The issue in question has been under the legal lens since October 2020. Reliance is vying to expand its retail offerings by acquiring Future Retail, but Amazon is trying to prevent this deal from going through.

Future Group vs Amazon: Brief timeline of events

November 2019 –Amazon acquired a 49 percent stake in Future Coupons, a promoter company that owns about 7.3 percent stake in Future Retail.

August 2020 –  Reliance announced that it will acquire most of Future Group’s retail, wholesale, and logistics business in a deal worth Rs 24,713 crore. Amazon objected to the Reliance deal in October 2020 saying that its agreement with Future Coupons had a non-compete-like pact and right of first refusal against deals with competitors like Reliance Retail.

October 25, 2020  Amazon obtained an emergency arbitrator’s award against the Future Retail–Reliance deal from a Singapore arbitration tribunal.

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March 18, 2021 – A single judge Justice JR Midha from Delhi High Court upheld the Singapore emergency arbitrator’s order against Future Group, putting on hold the Future–Reliance deal and attaching the properties of Future Group and its promoters Kishore and Rakesh Biyani. The court also imposed a cost of ₹20 lakh on Future Retail and its promoters and directed it to be deposited in the PM Cares Fund.

March 22, 2021 –  A division bench of the Delhi High Court stayed the March 18 order allowing the Future-Reliance deal to proceed. Amazon appealed to the Supreme Court against this stay.

August 6, 2021 – The Supreme Court ruled in favor of Amazon by accepting its appeal against the Delhi HC order dated March 22, which let the deal between Reliance and Future Retail proceed. The court also held that the emergency arbitrator’s award obtained by Amazon in Singapore can be legally enforced in India. Future Group filed a Special Leave Petition in the Supreme Court on August 12 against the March 18 order. An SLP can be filed against orders which are otherwise non-appealable.

August 28, 2021 – Future Retail files a fresh legal challenge in Supreme Court against Amazon.

A complete timeline of events can be found at the end of the article

What does Amazon’s letter to SEBI say?

The letter dated August 17 cites the recent Supreme Court order that ruled in favor of Amazon and held that the emergency arbitrator’s award obtained by Amazon in Singapore under the rules of the Singapore International Arbitration Center (SIAC) can be legally enforced in India.

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“In light of the directions contained in the enforcement judgment, and the EA (emergency arbitration) Order whose validity has been affirmed by the honorable Supreme Court, Amazon requests you to take all such action as is necessary to comply with the Supreme Court Judgment, and to further ensure that no communications subsist or emanate which are at variance with the Supreme Court Judgment. Accordingly, we request your good offices to direct the Indian Stock Exchanges to withdraw the Observation Letters with immediate effect,” the letter seen by Economic Times noted.

Amazon refused to share a copy of the letter with MediaNama citing confidentiality.

What is Future’s latest legal challenge seeking?

In its latest efforts to seek clearance for the Reliance deal, Future Retail on August 28 filed a challenge against Amazon in the Supreme Court, Business Standard reported. It is not known if this is in addition to the special leave petition filed on August 12 or part of the same.

The 6000-page filing argues that if the deal with Reliance doesn’t go through, it would cause “unimaginable” damage including job losses for 35,575 employees, and put 28,000 crore rupees in bank loans and debentures at risk, the report stated. “If the Scheme falls through, it is inevitable that FRL will go into liquidation,” the filing added.

The company asked the court to hear the case with “extreme urgency” and “stay the Impugned Orders” passed by the Delhi High Court on March 18.

Separately, Future Group has also moved an application before the Singapore International Arbitration Centre (SIAC) to revoke the emergency arbitrator’s award.

Future Group vs Amazon: Complete timeline

August 2019 – Filings revealed that Amazon is looking to acquire a 49% equity stake in Future Coupons — the promoter entity of Future Retail. Future Coupons owns a 7.3 percent stake in Future Retail, which operates 900 stores in India, including 293 Big Bazaar stores. If the deal goes through, Amazon will 3.58% stake in Future Retail.

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November 2019 – The Competition Commission of India (CCI) approvedAmazon’s proposed acquisition of 49% equity stakes in Future Coupons.

August 2020 – Reliance Industries (RIL) announces it will buy most of Future Group’s retail, wholesale, and logistics business in a deal worth Rs 24,713 crore.

October 7, 2020 – Amazon accuses Future Group of breach of contract and slapped it with a legal notice over the Future Group-Reliance deal. Amazon reportedly had a non-compete-like pact and right of first refusal against deals with competitors like Reliance Retail.

October 25, 2020 – Amazon obtained an injunction order against the Future-Reliance deal from a Singapore arbitration court, but Reliance Group and Future Retail publicly stated that they will proceed with their deal “without any delay.”

November 2, 2020 – Future Group urged stock exchanges to ignore Amazon’s objections to the Reliance deal saying that the emergency stay on the transaction obtained by Amazon from the Singapore International Arbitration Center had no legal force in India.

November 7, 2020 – Future Group moves Delhi Court against Amazon interfering in the acquisition by Reliance.

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November 11, 2020 – Amazon accuses Future Group of insider trading, saying that Reliance Retail was improperly informed of the Singapore arbitrator’s order.

November 20, 2020 – Despite Amazon’s protest, the Competition Commission of India approved Reliance Retail’s ₹24,713 crore acquisition of Future Group’s retail, wholesale, logistics, and warehousing businesses.

December 21, 2020 – The Delhi High Court said that while it wouldn’t stop the Future-Reliance deal from happening, the court wouldn’t interfere with regulators making their own assessment of the legality of the deal.

January 20, 2021 – The Securities and Exchange Board of India (SEBI) gave its conditional approval for the Future-Reliance deal.

March 18, 2021 – A single judge from Delhi High Court upheld the emergency arbitration order obtained in Singapore against Future Group, putting on hold the Future-Reliance deal. The judge upheld that the purchase violated an agreement that was signed between Amazon and Future Coupons, an investor company in Future Retail Limited. The court observed that the Future Group had agreed to give Amazon a veto on transactions like the Reliance Retail acquisition, but failed to hold good to that commitment. The high court also ruled that Future Retail must deposit Rs 20 lakh into the PM-CARES fund, and that company executives must respond on why they shouldn’t be jailed.

March 22, 2021 – A division bench of the Delhi High Court stayed the March 18 order. Amazon appeals to the Supreme Court against this stay order.

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July 9, 2021 – The Supreme Court moved the hearing to July 20, after the final hearing before the Singapore Arbitration Tribunal, which began on July 12.

July 21, 2021 – The Supreme Court began hearing arguments from Future Retail and Amazon.

July 23, 2021 – CCI in a letter dated June 4 accused Amazon of concealing facts and making false submissions in 2019 when it sought approval for an investment in Future Coupons.

July 29, 2021 – The Supreme Court reserved its judgment on the issue.

August 6, 2021 – The Supreme Court ruled in favor of Amazon by accepting its appeal against the Delhi HC order dated March 22, which let the deal between Reliance and Future Retail proceed. The court held that the emergency arbitrator’s award obtained by Amazon in Singapore can be legally enforced in India.

August 12, 2021 – Future Group filed a Special Leave Petition in the Supreme Court against the March 18 order, which is yet to come up for hearing. An SLP can be filed against orders which are otherwise non-appealable.

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August 18, 2021 – The Delhi High Court told Future Group that, unless it gets a stay order from the Supreme Court by September 17, the court will implement its single-judge order issued on March 18 restraining the sale of Future Retail to Reliance and attaching its properties

August 28, 2021 – Future Group files a fresh legal challenge in Supreme Court against Amazon.

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