The Delhi High Court on Monday allowed Amazon.com Inc. to oppose Mukesh Ambani’s Reliance Retail to buy the Rs 24,713 crore property of Future Group. However, the court left the decision of the deal to the regulators. Know what has happened in this case till now.
- Last year, Amazon acquired a 49% stake in Future Coupons, a promoter arm of Future Retail, worth Rs 2,000 crore.
- Under the deal, Amazon was given a ‘call’ option, enabling it to use the possibility of acquiring all of Future Retail’s shareholding in the company, promoter of Future Coupons within 3-10 years.
- In August, Reliance Retail announced the acquisition of the retail and wholesale business, logistics and warehousing business from Future Group.
- Soon after Reliance’s announcement to buy Future Retail, Amazon called the deal a violation of the non-compete clause and the right-of-first-refusal pact that it had signed with Future Group.
- According to Amazon, Future Group is required to notify Amazon before entering into any sale agreement with third parties.
- Future Group said that it has not sold any stake in Future Coupon and is selling its assets and therefore has not breached any of the terms of the contract.
- Amazon then moved to the Emergency Arbitrator of the Singapore International Arbitration Center (SIAC) nearby, which prevented Future Group from taking any step in pursuing transactions with Reliance Retail.
- Amazon Inc wrote to statutory authorities such as market regulator SEBI, the Competition Commission of India (CCI), stating the Emergency Arbitrator’s order ‘binding’ to stop the deal.
- Despite Amazon’s appeal not to approve the Reliance-Future retail deal by writing to the Antitrust Regulator, the Competition Commission of India (CCI) approved the transaction on 20 November.
- The Future Group moved the Delhi High Court, seeking to stop Amazon from writing to the statutory authorities in an attempt to block its deal with Reliance.
- On Monday, the Delhi High Court dismissed Future Group’s plea, stating that it wanted to stop Amazon from interfering in the sale of its $ 3.4 billion assets to Reliance.
What did the court say?
Justice Mukta Gupta said in his order on Monday, “The present application is a settlement of, rejecting the grant of an interim injunction by the FRL as a plea, however, the statutory authority/regulator is directed to abide by the law.”
What will happen next?
All eyes will be on market regulator SEBI to approve the deal. According to Reliance sources, SEBI has to approve the scheme submitted by Future Retail, as the scheme complies with the statutory provisions of the Companies Act and other SEBI rules. Amazon’s objections to the approval of the scheme by SEBI are no longer relevant.
An Amazon spokesperson said in response to a question, “We welcome the decision of the High Court of Delhi which rejects the interim injunction sought by Future Retail and their claim that Emergency under Indian law. The Emergency Arbitrator process is invalid.