indian court rejects retail giant future group’s plea against amazon
A court in India has dismissed Future Group’s request to prevent Amazon from intervening in – and ultimately obstructing – the Indian retail company’s $3.4 billion agreement to sell its assets to Reliance Industries, owned by Mukesh Ambani, offering a positive development for the American e-commerce company which has invested over $6.5 billion in the world’s second-largest internet market.
Future Group had been seeking a temporary injunction to prevent Amazon from contacting regulatory bodies and other authorities to express concerns about – and potentially stop – the agreement between the two Indian corporations. The Delhi High Court determined on Monday that Amazon could not be prohibited from communicating with regulators and authorities due to the risk of “potentially irreversible harm.” The court stated that the decision regarding the deal’s approval will be made by the regulators, in accordance with applicable laws.
The court also noted, however, that the lawsuit brought forth by Future Retail, a part of Future Group, was legally valid, and its attempt to gain approval for the transaction with Reliance Industries was also permissible.
“We are pleased with the decision of the Honorable High Court of Delhi to deny the interim injunction requested by Future Retail and their assertion that the Emergency Arbitrator process is invalid under Indian law,” stated an Amazon representative.
This ruling represents the latest development in the ongoing dispute between Amazon and Future Group, formerly allies. Amazon acquired a 49% stake in one of Future’s unlisted companies last year in a transaction valued at over $100 million. Amazon’s court submissions indicated that, as a condition of that agreement, Future was restricted from selling assets to competitors.
Circumstances shifted this year as the coronavirus pandemic created financial difficulties for the Indian company, as explained by Future Group’s chief executive and founder, Kishore Biyani, during a recent online conference. In August, Future Group announced it had reached an agreement with Ambani’s Reliance Industries, which operates India’s largest retail chain, to sell its retail, wholesale, logistics, and warehousing operations for $3.4 billion.
In subsequent months, Amazon challenged the deal by appealing to an arbitrator in Singapore and requesting the court to halt the agreement between the Indian retail companies. Amazon obtained emergency relief from the arbitration court in Singapore in late October, temporarily preventing Future Group from proceeding with the sale.
Until Monday, the validity of that ruling within the Indian legal system remained uncertain. Notably, shortly after the Singapore arbitration court issued its decision, Future Group and Reliance released a statement indicating their intention to move forward with the deal “without delay.”
Amazon also contacted the Competition Commission of India, the Indian regulatory agency, to block the deal. However, the Competition Commission of India subsequently approved the agreement between the Indian companies. During previous court sessions, Future Group’s legal representatives compared Amazon’s efforts to obstruct the deal to the actions of the East India Company, the British trading firm whose arrival in India initiated nearly two centuries of colonial governance.
The potential value of India’s retail market, projected to reach $1.3 trillion by 2025, up from $700 billion last year, is a key factor in this dispute, according to consultancy firm BCG and local trade group Retailers’ Association India. Currently, online shopping represents approximately 3% of all retail sales in India.
Future Group has not yet issued a response to a request for comment.