Two of the richest man in the world are fighting for the E-commerce & Retail market in India. The fight is basically for the dominance in the India’s 1 trillion $ consumer retail market. It is for the Future Groups Retail business who has around 1550 stores in India, having flagship brands like BigBazzar, FBB & Foodhall, Easyday, Heritage Fresh. Whoever gets a hold of this will have an upper hand in the retail market of India. While Mukesh Ambani’s owned Reliance Retail Ventures Ltd. has shown interest in buying stake in Future groups business with an investment of 24,713 Crore Rupees, Amazon has opposed it. Here’s what has happened so far in this feud. The reason why the E-commerce giant has opposed this move is because of the deal that Amazon has made with Future Coupons Ltd. an Unlisted subsidiary of the Future Group in 2019. The deal was of buying 49% stake in the Future Coupons with an “call option” through which Amazon can acquire the company within 3-10 years of the deal. Apart from this it also had “right to refusal” power through which Future Group was barred from doing any transaction with number of people & companies including Mukesh Ambani and Reliance. Future Coupon is the promoter of Future Retail Ltd. and own 7.3% of the Future Retail Ltd. By acquiring 49% stake in Future coupon, Amazon indirectly holds a 3.6% stake in FRL. Due to the Covid-19 pandemic & lockdown imposed because of the pandemic many companies have suffered in India, among which was Future Group. They lost around 7000 crores Rs. because of their stores being closed because of the lockdown. In order to recover and get back on track they decided to do the restructuring of its companies like FRL, Future Lifestyles Fashions & Future Market Network into one single entity. In addition to this was the deal made with Reliance Retail Ventures Ltd. to sell its retail, wholesale, logistics & warehousing business to RRVL. Since Amazon was still holding stake of 49% in Future coupons & because as part of that deal this transaction with RRVL cannot happen, it moved to Singapore International Arbitration Court as Amazon invoked arbitration clause against Future Group. Amazon could not approach Indian courts directly because the deal made in 2019 include arbitration clause, which said that in case of dispute it would be resolved through Singapore International Arbitration Court. Amazon found a little success as it got interim order by SIAC to put hold on the deal between RRVL & Future Group until the main arbitration hearing are being made. However, RRVL & Future Group had decided to go on with the deal, as Future Group said that they were not the part of the deal made by Amazon & Future Coupons and therefore it is not bound by the arbitration proceeding of SIAC. On the top of that what makes Amazon’s position weaker is that the orders of Emergency Arbitrator at the SIAC, are not enforceable in India. The law which governs arbitration in India does not recognise interim orders of an Emergency Arbitrator. And hence if the deal even went through there is nothing Amazon can really do about it. So, in order to stop the deal from going through Amazon has written to SEBI, Stock Exchanges, & CCI (Competition Commission of India) and urged them to take into consideration of Singapore arbitrator's interim decision as it is a binding order. But CCI has approved the deal made between RRVL & Future Group after checking all the legalities. While SEBI still waits for the clarifications from BSE, both the parties from the RRVL & Future Group has started the procedures to get the approvals from the lender, suppliers & shareholders. Whoever gets on the top of this will have an upper hand in the retail consumer market in India. Thank you.
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