The letter complicates Amazon's bitter legal battle with
Future Group over the Indian's firm's decision to sell its retail assets to
Reliance Industries - a matter that is now before India's Supreme Court.
Amazon has argued that terms agreed upon in its 2019 deal to
pay $192 million for a 49 percent stake in Future's gift voucher unit prevent
its parent, Future Group, from selling its Future Retail business to Reliance.
In the letter dated June 4, the Competition Commission of India (CCI) said Amazon hid factual aspects of the transaction by not revealing its strategic interest in Future Retail when it sought approval for the 2019 deal.
"The representations and conduct of Amazon before the Commission amounts to misrepresentation, making false statement and suppression or/and concealment of material facts," the letter said. It also noted that its review of the submissions made had been prompted by a complaint from Future Group.
In the four-page letter, a so-called 'show cause notice', the CCI asked Amazon why it should not take action and penalise the company for providing false information.
Amazon has yet to respond, according to a source with direct knowledge of the matter who declined to be identified as the letter has not been made public.
Amazon said in a statement to Reuters it had received a
letter, was committed to complying with India's laws and would extend its full
cooperation to the CCI.
"We are confident that we will be able to address the
CCI's concerns," it said.
Representatives for Future and the CCI did not respond to
Reuters requests for comment.
Vaibhav Choukse, a competition law specialist and partner at
J. Sagar Associates, said it was rare for the CCI to issue such a notice and
that if the CCI was not satisfied by Amazon's response, it could lead to a fine
and even a review of the deal.
"The CCI has wide powers which includes directions to
re-file the approval application and even revoke the approval under exceptional
circumstances," Choukse said.
The CCI's 2019 approval order states its decision
"shall stand revoked if, at any time, the information provided" is
found to be incorrect.
Shares in Future Retail jumped after Reuters published
details of the letter, extending gains to be up nearly 5 percent in Thursday
afternoon trade.
Submissions compared
The dispute over Future Retail, which has more than 1,500
supermarket and other outlets, is the most hostile flashpoint between Jeff
Bezos' Amazon and Reliance, run by India's richest man Mukesh Ambani, as they
try to gain the upper hand in winning over the country's consumers.
Amazon also has a host of other challenges in India, a key
growth market where it has committed $6.5 billion in investments, including a
separate CCI probe into alleged practices that small businesses say have hurt
them.
In addition, it faces the prospect of more regulations that
would restrict the sale of private labels and would prohibit the US firm from
allowing its affiliates to list products on its website.
The CCI letter compared three sets of submissions Amazon
made to it in 2019 with submissions made later to other legal forums, saying
they were "contradictory."
In particular, it said Amazon had explained its interest in
investing in Future's coupon unit as one that would address gaps in India's payments
industry. But the letter stated Amazon had disclosed in other legal forums that
the foundation of its relationship with Future Coupon was certain special
rights it obtained over Future Retail.
"Amazon has concealed its strategic interest" in
Future Retail, the letter said, adding: "Such interest and the purpose of
the combination ... was not disclosed to the Commission despite specific
requirements."
The CCI also objected to one section of a submission where Amazon had told the regulator it had nothing to do with one particular legal agreement that two Future entities had signed between themselves days ahead of its 2019 deal. But Amazon later claimed before an arbitrator that the agreement was an "integrated part" of the transaction, the letter said. © Reuters
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