- According to the contract with the Future group that Amazon had entered last year, the sale of the business to rivals (Reliance) is barred.
- The SIAC has ordered that the Future-RIL transaction be stayed until a permanent arbitration tribunal was constituted 90 days later.
US-based e-commerce giant Amazon’s Indian arm has written to the Securities and Exchange Board of India (SEBI), Bombay Stock Exchange (BSE), and National Stock Exchange (NSE), asking them to take into consideration the Singapore arbitrator's interim judgment that has put on hold the Rs 24,713-crore deal between Future group and Mukesh Ambani's Reliance Industries Ltd.
The Future Group-RIL deal is subject to approvals from various regulatory authorities, including the Securities and Exchange Board of India (SEBI) and the Competition Commission of India (CCI).
Amazon is against the deal as it had bought a 49% stake in Future Coupons last year. Future Coupons is the promoter-entity of Future Retail and according to the contract, the sale of the business to rivals (Reliance) is barred.
Hence Amazon's argument is that the Future group violated the contract by entering into the deal with rival Reliance.
“With respect to upholding the sanctity of contractual obligations, it is prudent that SEBI and other authorities take into consideration the interim order of the Singapore arbitrator when they are reviewing the proposed deal,” one of the sources told PTI.
The e-commerce giant had dragged Future group to arbitration at Singapore International Arbitration Centre (SIAC) after the indebted Kishore Biyani group firm signed a pact to sell retail, wholesale, logistics, and warehousing units to billionaire Mukesh Ambani's Reliance in August this year.
As a result, the SIAC ordered for an arbitration process to be followed by Future and Amazon, and that the Future-RIL transaction be stayed until a permanent arbitration tribunal was constituted 90 days later.
While the order was welcomed by Amazon India, Future Retail and Reliance Retail Ventures said they intended to go ahead with the deal as planned.
This comes at a time when Reliance has been bolstering its position in the country's retail segment.
With the launch of its online store JioMart earlier this year, Reliance Retail entered into direct competition with Amazon in the e-commerce sector. Reliance Retail Ventures Ltd (RRVL) has also been raising investments by selling a stake in the entity.
Reliance Retail operates about 12,000 stores in nearly 7,000 towns, with 640 million footfalls across core categories of grocery, consumer electronics, and apparel. Revenues of RRVL stood at Rs 1.63 lakh crore in FY20.