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Here’s why the Enforcement Directorate has summoned Amazon India executives

The US e-commerce giant and Future Group are presently engaged in a conflict over an asset sale.

The Enforcement Directorate (ED) has summoned officials from Amazon India and Future Group on December 6 over alleged violations of foreign investment rules, Reuters reported on November 28. An Amazon spokesperson confirmed the receipt of the summons and said that the company is "examining it and will respond within the given time frame." ED is currently investigating irregularities in Amazon's investment in Future Coupons in 2019, which is at the heart of the dispute between Amazon and Future Group. Recap: In November 2019, Amazon received approval to acquire a 49 percent equity in Future Coupons, the promoter entity of Future Retail, which operates 900 stores in India. Since Future Coupons owned a 7.3 percent stake in Future Retail, the deal gave Amazon a 3.58 percent stake in Future Retail. Then, in August 2020, Reliance announced that it will buy most of Future Group’s retail, wholesale, and logistics business in a deal worth Rs 24,713 crore. Amazon objected to this acquisition saying it had the right of first refusal because of its stake in Future Coupons. Both the companies have been engaged in a legal battle over this issue since October 2020, which you can read all about here. Why this matters: If ED finds that Amazon violated rules when investing in Future Coupons, then it might render the company’s right of first refusal to the Reliance—Future deal ineffective, potentially allowing the deal to proceed. How Amazon might have violated foreign investment rules? In a letter to the Competition Commission of India (CCI), the independent directors…

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