Business

The struggle for retail dominance with Amazon’s Reliance Industries


In 2020, Future – hit hard by the Covid-19 pandemic – decided to sell its assets to Reliance.

New Delhi: For more than a year, Amazon.com Inc. and the Future Group of India have been locked in a complex legal situation that has halted the sale of Future’s $ 3.4 billion in assets to Reliance Industries, the country’s largest conglomerate, a rival.

Amazon and Future agreed to an out-of-court settlement discussion this month, but both sides told the Indian Supreme Court on March 15 that they had not resolved the matter.

Below is a guide to the conflict.

Trigger

In 2019, Amazon and Future, the 2nd largest player in India behind Reliance market leaders, became business partners when the US company invested $ 200 million in a unit of the Indian group.

That deal, Amazon says, had anti-competition clauses that forbade the future from selling retail assets to certain rivals, including Reliance, the richest man in India headed by Mukesh Ambani. The terms of the agreement must be resolved by the Singapore International Arbitration Center.

In 2020, Future – hit hard by the Covid-19 pandemic – decided to sell its assets to Reliance.

Amazon then turned to the Singapore arbitrators and successfully stopped the sale. The two sides have also sued each other in Indian courts, including the Supreme Court.

Their Arguments

Amazon has argued that several agreements with Future in 2019 gave it special rights over Future’s retail assets, some of which it would eventually own if it eased the rules for foreign investors in India. The US company said the potential futures deal could “destroy” the latter.

The future denies any wrongdoing, claiming that Amazon is illegally seeking control of Future’s retail business. Future Retail – the arm of the group’s flagship retailer – if the Reliance deal fails, it will face liquidation.

Bets

If Amazon were to dominate, it could become a bigger force in the Indian $ 900 billion retail market than Reliance.

Reliance has 1,100 supermarkets, and Future has about 1,500, both of which are rapidly expanding into e-commerce.

Amazon has invested $ 6.5 trillion in India – a key growth market for e-commerce. Future partnerships helped Amazon expand its online food delivery portfolio by integrating the Indian company’s stores into its website.

Keeping the Future Away from Reliance is in line with Amazon’s efforts to meet Ambani’s growth plans. In a secret legal filing, Amazon said Reliance’s strong position with Future would “further reduce competition in the Indian retail market”.

The Wrangling

The Future last year complained to India’s anti-competition agency that Amazon was making incorrect and contradictory submissions about the intent of the 2019 deal.

Amazon said it never hid any information, but last December the caretaker canceled its approval of the 2019 Future Agreement, saying it was “Amazon’s intentional design” to remove the real scope of the agreement and its interest in Future Retail. businesses.

In a setback for the US giant, an Indian court in January suspended the Singapore arbitration proceedings between the two sides over its anti-competitive ruling.

Reliance hijacked stores and failed conversations

On February 25, Reliance, which had no public role in the lawsuit, suddenly took control of hundreds of Future stores, citing non-payment of the corresponding rent.

On March 3, Amazon pulled out an olive branch at a Supreme Court trial, saying the “whirlwind” of litigation was coming to an end, and proposed future agreed-upon talks.

On March 15, both sides told the court that the talks had failed. The same day, Amazon released newspaper ads accusing Indian companies of transferring stores “clandestinely in fraud by defrauding India’s constitutional courts.” Reliance has not commented, while Future denies any wrongdoing.

Sources said the talks fell through because Amazon wanted at least $ 200 million – the amount it invested in the Future unit – to return. But the Indian company said it was not in a financial position to do so.



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