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Amazon takes legal challenge against partner Future Group to India Supreme Court

Amazon takes legal challenge against partner Future Group to India Supreme Court

13.02.2021 | Ananaya Agrawal | National Law U. Delhi, IN FEBRUARY 12, 2021 05:01:15 PM | 597

Amazon filed an appeal against its Mumbai-based partner Future Group in the Indian Supreme Court on Thursday to stop the sale of Future’s $3.4 billion retail assets to Amazon’s market competitor Reliance Industries.

Amazon alleges that Future Group has violated non-compete clauses in contracts from 2019 under which the US e-commerce giant acquired a 49 percent stake in Future Group’s promoter firm Future Coupons Ltd. The contract also had provisions against selling the Indian firm’s assets to anyone on a “restricted persons” list, which included Reliance Industries. Among other things, the Future Group argues that it has not violated any terms as it was merely selling its assets and has not transferred any stake to Reliance.

At the Supreme Court, Amazon is appealing an order of the Delhi High Court’s Division Bench that had stayed the implementation of an earlier order granting interim relief to Amazon. The order for interim relief had been issued by a single-judge bench of Justice Midha from the same court directing all parties and concerned authorities to maintain the status quo until the pronouncement of a detailed order for interim relief. However, the Division Bench held that there was no reason for the status quo order and that statutory bodies such as the Securities and Exchange Board of India (SEBI) and Competition Commission of India (CCI) cannot be restrained from “proceeding in accordance with law.”

Amazon contends that the Division Bench order is “illegal,” “arbitrary” and without jurisdiction. It further contends that the company would face “irreparable harm” if the Division Bench order is not stayed by the top court.

While the CCI in November approved the deal for “acquisition of retail, wholesale, logistics, & warehousing businesses” between Reliance and Future Group, Amazon has secured an injunctive award by an emergency arbitrator at the Singapore International Arbitration Centre.

Future Group, which is India’s second-largest retailer, has indicated that it will be at risk of liquidation if the deal with Reliance Industries falls through. Both Reliance and Amazon are giants in India’s consumer retail market. The final result of this litigation is expected to have a significant impact on competition in the pandemic-hit e-commerce sector.

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