Exclusive: Amazon tells India regulator its partner Future Retail is
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[October 31, 2020] By
NEW DELHI (Reuters) - Amazon.com Inc <AMZN.O>
has complained to India's market regulator that its local partner Future
Retail Ltd <FRTL.NS> misled shareholders by incorrectly saying it was
complying with its contractual obligations to the U.S. e-commerce giant,
a letter seen 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 Reliance Industries
Ltd <RELI.NS> for $3.4 billion. The deal, Amazon alleges, breaches 2019
agreements by Future.
The tussle has strained Amazon's ties not just with Future Retail - one
of India's top retailers - but also with Ambani, Asia's richest man, and
his Reliance group, which is fast expanding its e-commerce business and
threatening companies like Amazon.
Amazon last Sunday won an injunction to halt Future's deal with Reliance
from a Singapore arbitrator both sides had agreed to use in case of
disputes. The Indian retailer then said in a news release it had
complied with all agreements and "cannot be held back" by the
In the letter to the Securities & Exchange Board of India (SEBI)
Chairman Ajay Tyagi on Wednesday, Amazon said Future's news release and
stock exchange disclosures violated Indian regulations, urging the
regulator to investigate the matter and not approve the deal.
"Such a disclosure is against public interest, misleads public
shareholders ... as well as perpetuates a fraud for the benefit of the
Biyanis alone," Amazon letter said, referring to Future's promoter
family led by Kishore Biyani.
A spokesman for Future Group and the Biyani family declined to comment.
A Future group source denied Amazon's allegations, saying there was no
question of any fraud or misleading the public or shareholders, without
Amazon declined to comment on its letter, the contents of which have not
previously been reported. Reliance and SEBI did not respond to requests
Amazon says the 2019 deal, in which it invested nearly $200 million in a
Future unit, had clauses saying the Indian group could not sell its
retail assets to anyone on a "restricted persons" list, which included
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An employee of Amazon walks through a turnstile gate inside an
Amazon Fulfillment Centre (BLR7) on the outskirts of Bengaluru,
India, September 18, 2018. REUTERS/ Abhishek N. Chinnappa
Reliance, which in August bought Future's retail, wholesale and some other
businesses, has said it plans to "enforce its rights and complete the (Future)
transaction ... without any delay."
The faceoff comes as Jeff Bezos-led Amazon has already been battling tighter
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 the Singapore arbitrator's order in favour of
Amazon is not automatically enforceable and would need 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 in the matter "would promote ease of doing business in India by
holding listed companies accountable for their dealings," Amazon's letter says.
Amazon says the Future-Reliance deal means the U.S. giant will lose the prospect
of becoming the single largest shareholder of the Indian retailer, which has an
"irreplaceable and widespread network" of more than 1,500 retail stores.
Future has argued it entered into the deal with Reliance because its retail
business was severely hit during the COVID-19 pandemic and it was critical to
protect all its stakeholders.
The arbitrator, V K Rajah, a former attorney general of Singapore, sided with
Amazon in his Oct. 25 order, saying: "The law expects businesspersons to honour
their contractual commitments."
The U.S. company told SEBI that if the Future-Reliance deal "is implemented by
completely disregarding the interim (arbitration) award, it will cause
irreparable harm and injury to Amazon."
(Reporting by Aditya Kalra in New Delhi; Additional reporting by Abhirup Roy in
Mumbai; Editing by William Mallard)
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