 "NCLAT upholds CCI order, asks Amazon to pay Rs 200 cr penalty in 45 days")
The National Company Law Appellate Tribunal (NCLAT) on Monday rejected Amazon's plea challenging the decision of fair trade regulator CCI to suspend the approval for the e-commerce major's deal with Future Coupons.
The NCLAT said "the appellant Amazon has not made full, whole, forthright and frank disclosures of relevant materials. It had furnished only limited disclosures pertaining to acquiring its strategic rights and interest in FRL (Future Retail Ltd)" and executing the commercial contract.
"In this regard, this appellate tribunal is in complete agreement with the view arrived at by the first respondent (CCI)... ", said the NCLAT bench comprising Justice M Venugopal and Ashok Kumar Mishra.
In December last year, the Competition Commission of India (CCI) suspended the approval given by it in 2019, for Amazon's deal to acquire a 49 per cent stake in Future Coupons Pvt Ltd (FCPL).
The regulator had said that Amazon suppressed information while seeking clearances for the transaction back then and also slapped a fine of Rs 202 crore on the company.
This includes a Rs 200 crore penalty for Amazon's to notify the combination in the requisite terms and two penalties of Rs one crore each for suppressing the actual scope and purpose of the combination.
Also Read
However, NCLAT slightly modified the orders of CCI and said the penalty of Rs one crore each imposed was "on the higher side" and reduced it to Rs 50 lakh each.
"This appellate tribunal based on the relevant facts and circumstances of the case, mainly the availability of the competitions in the market and financial health of the industry... imposes a penalty of Rs 50 lakh each as per sections 44 and 45 of the competition act 2002," said NCLAT directing Amazon to pay Rs one crore within 45 days calculated from the date of passing of judgement.
But NCLAT upheld the Rs 200 crore penalty imposed on Amazon.com NV Investment Holdings LLC (Amazon) -- a direct subsidiary of Amazon.com Inc -- for failure to notify the combination in the requisite terms.
"As regarding the non-furnishing of the information, namely the appellant (Amazon) omission for the lapse and for failure to notify the combination as per the obligatory required under section 6 (2) of the act (the Competition Act, 2002) , this tribunal holds that appellant Amazon was at the failure to provide the relevant information on the combination.
"Being responsible and accountable in not giving notice as required under this regard, this tribunal to secure the ends of justice, is not displacing the imposition of penalty of Rs 200 crore levied upon Amazon by CCI in the impugned order since the same is fair and sensible as per section 43 (a) of the act," said NCLAT while pronouncing its order orally in the virtual court.
A detailed judgement is still awaited in the matter.
"This tribunal directs Amazon to pay the sum of Rs 200 crore within 45 days from today, the date of passing of this judgement," it said.
FCPL is a promoter of Future Retail Ltd (FRL).
Amazon had opposed FRL's deal to sell assets to Reliance Retail as part of a Rs 24,713-crore deal, which has now been called off.
The deal was opposed by the e-commerce major on the basis of its 2019 transaction whereby it had acquired the 49 per cent stake in FCPL.
In August 2019, Amazon had agreed to purchase 49 per cent in unlisted Future Coupons, which owns 7.3 per cent equity in listed Future Retail through convertible warrants, with the right to buy into the flagship Future Retail after a period of 3 to 10 years. The deal size was around Rs 1,400 crore.
FRL is presently facing an insolvency petition before the Mumbai bench of the National Company Law Tribunal by its lender after it committed defaults.
NCLAT concluded its hearing in April this year, over Amazon's plea after all parties filed revised notes of submissions along with relevant citations before the registry.
Apart from Amazon's plea, the appellate tribunal had also reserved the order on two other petitions in the matter filed by the Confederation of All India Traders (CAIT) and All India Consumer Products Distributors Federation (AICPDF).
FRL was part of the 19 group companies operating in retail, wholesale, logistics and warehousing segments, which were supposed to be transferred to Reliance Retail as part of a 24,713 crore deal announced in August 2020.
The deal was called off by the billionaire Mukesh Ambani-led Reliance Industries Ltd in April.
While commenting on the development CAIT welcomed NCLAT order and said any move to captivate Indian e-commerce and retail trade by anyone will not succeed under any circumstances.
"NCLAT Judgment is a vindication of CAIT's stand which was consistently highlighted the brazen anti-competitive practices and violations of law by Amazon, including its actions of deep-discounting, B2C e-commerce and the manner in which it has entered the retail trading sector through its acquisitions of More Retail Ltd. and FRL," the trader body said in a statement.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)