Amazon tells India regulator its future retail partner is misleading the public
Amazon has complained to the Indian market regulator that its local partner Future Retail misled shareholders by incorrectly saying it was fulfilling its contractual obligations to the US e-commerce giant, a letter accessed by Reuters shows.
Amazon is locked in a bitter legal dispute with Future group, which in August sold its retail assets to Mukesh Ambani-LED Dependence Industries for $ 3.4 billion. The deal, Amazon alleges, violates Future’s 2019 agreements.
The fight has strained Amazon’s ties not only with Future Retail, one of India’s top retailers, but also with Ambani, Asia’s richest man, and his Reliance group, which is rapidly expanding its e-commerce business and threatens to companies like Amazon.
Last Sunday, Amazon won a court order to stop Future’s deal with Reliance from a Singaporean arbitrator that both parties had agreed to use in case of disputes. The Indian retailer later said in a press release that it had complied with all agreements and “cannot be held” by arbitration proceedings.
In the letter to the Chairman of the Securities and Exchange Board of India (SEBI) Ajay Tyagi on Wednesday, Amazon said that Future’s press release and the stock exchange’s disclosures violated Indian regulations, urging the regulator to investigate the issue and not approve the agreement.
“Such disclosure is against the public interest, misleads public shareholders … and perpetuates fraud only for the benefit of the Biyani,” the letter from Amazon said, referring to the Future promoter family led by Kishore Biyani.
A spokesperson for Future Group and the Biyani family declined to comment. A source from the Future group denied Amazon’s allegations, saying it was not fraud or misleading the public or shareholders, without elaborating.
Amazon declined to comment on his letter, the content of which has not been previously reported. Reliance and SEBI did not respond to requests for comment.
Amazon says the 2019 deal, in which it invested nearly $ 200 million in a Future unit, had clauses that said the Indian group could not sell its retail assets to anyone on a “restricted persons” list, which included Reliance. .
Reliance, which bought Future’s retail, wholesale and some other businesses in August, has said it plans to “assert its rights and complete the (Future) transaction … without delay.”
The showdown comes as Amazon, led by Jeff Bezos, has already been fighting stricter foreign investment rules and antitrust cases in India, which is one of its key growth markets where it has committed investments of $ 6.5 billion.
Some Indian lawyers have argued that the Singapore arbitrator’s order in favor of Amazon is not automatically enforceable and would require ratification by an Indian court. But Amazon believes the order is binding, it told SEBI. The letter asks the regulator to “suspend review” of the deal.
SEBI’s action on the matter “would promote the ease of doing business in India by holding publicly traded companies responsible for their transactions,” the letter from Amazon said.
Amazon says the Future-Reliance deal means the US giant will lose the prospect of becoming the largest shareholder in the Indian retailer, which has an “irreplaceable and extended network” of more than 1,500 retail stores.
Future has argued that it signed a deal with Reliance because its retail business was badly affected during the COVID-19 pandemic and it was critical to protect all of its stakeholders.
The arbitrator, VK Rajah, a former Singapore attorney general, sided with Amazon in his Oct. 25 order, saying: “The law expects entrepreneurs to honor their contractual commitments.”
The US company told SEBI that if the Future-Reliance agreement “is implemented in complete disregard of the interim award (arbitration), it will cause irreparable damages to Amazon.