Future vs Amazon: Who is winning?

  • Amazon claims that it has 9.83% equity in Future Retail and it enjoys veto power over any sale of Future Coupons, in which it owns 49% share

In the ongoing tussle between Amazon and Future Retail, both the companies might expect some solace as well as despondency. Recently, the High Court of Delhi ruled out Future’s litigation against Amazon writing to the regulatory bodies and its continuous interference on Future Retail Ltd. (FRL) deal with Reliance. Nonetheless, the court also noted that according to law, Future’s deal with Reliance is justified, which in turn gave a blow to Amazon’s claim. 

The biggest setback for the American e-commerce giant is that its deal with Future Coupons previously is in the nature of control and hence, needed prior government approval in the absence of which it is in violation of FEMA/FDI rules. According to legal experts, Amazon’s lawsuit is based upon its previous deal with Future Coupons where it cherished veto power and if that turns to be illegal, then surely it will be a trouble for Amazon.

Nonetheless, the court has mentioned that according to law, the statutory body has the right to take their own call over this issue. It further added that Future’s approving the transaction with Reliance is also justified. The court has taken this decision after the Singapore International Arbitration Centre (SIAC) tried to restrict Future Retail from making a deal with Reliance.

Read more: Delhi High Court declines Future’s litigation to restrain Amazon from writing to higher authorities

In short, the court has supported the decision of SIAC in favour of Amazon and said the e-commerce firm has the right to challenge the FRL-Reliance deal before the regulatory body. Legal experts also added that since this decision is passed by a single bench, both the firms have the right to challenge it before the division bench.

Back in August this year, Future group sold all its assets to Reliance, but Amazon claims the deal is illegal and infringed their agreements. The SIAC on October 25 passed an interim order in favour of Amazon barring FRL from taking any step to dispose of or encumber its assets or issuing any securities to secure any funding from a restricted party, according to the Financial Express. 

“..both FRL (Future Retail) and Amazon have already made their representations and counter representations to the statutory authorities/regulators and now it is for the statutory authorities/regulators to take a decision thereon.. Consequently, the present application is disposed of, declining the grant of interim injunction as prayed for by FRL, however, the statutory authorities/regulators are directed to take the decision on the applications/objections in accordance with the law,” the court said.

“On two counts, FRL has been able to make out a prima facie case of tortious interference by Amazon. It is clarified that it is not the making of the representation by Amazon to the statutory authorities or the regulators, which is an actionable wrong but making a representation based on incorrect assertions which makes the act based on unlawful means,” the order added.

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