The Supreme Court on Wednesday set aside the ₹202 crore penalty imposed by the Competition Commission of India (CCI) on Amazon for failing to reveal crucial details of its acquisition of a 49 per cent stake in Future Coupons Private Limited (FCPL).
A Bench of Justices Vikram Nath and Sandeep Mehta directed that any amount deposited or recovered from Amazon should be refunded within eight weeks.
Amazon had challenged the penalty over alleged suppression of material details while seeking approval for its 2019 investment in Future Coupons.
The case stems from Amazon’s 2019 investment in Future Coupons Private Limited (FCPL), an entity connected to Future Retail Limited (FRL). Amazon had notified the CCI that it was acquiring 49% in FCPL.
The transaction structure also involved the transfer of 2.52% shares of FRL to FCPL. Amazon’s position before the CCI was that the investment was aimed at strengthening FCPL’s gift card, loyalty card and payments-related business.
The CCI approved the combination on November 28, 2019 after finding that the proposed transaction was not likely to cause an appreciable adverse effect on competition in India. However, the approval order also recorded that it would stand revoked if the information provided by Amazon was later found to be incorrect.
The dispute later took a serious turn after CCI examined Amazon’s internal correspondence. According to CCI, these documents showed that Amazon’s real interest was not merely FCPL’s gift card business, but a strategic foothold in Future Retail and India’s offline retail sector.
The internal documents referred to “Project Taj”, Future Retail’s store network, ultra-fast delivery across top Indian cities, private-label grocery and fashion products and the possibility of increasing Amazon’s stake when foreign investment laws changed.
CCI held that Amazon had suppressed the actual scope and purpose of the deal. It found that the FRL shareholders’ agreement and the commercial arrangements between Amazon and Future group entities were interconnected parts of the combination, but were not disclosed in their proper context.
The Commission also found that Amazon had projected FCPL’s business potential as the reason for the investment, while its own internal records showed that FCPL was being used as a vehicle to obtain strategic rights over FRL.
On December 17, 2021, CCI kept its earlier approval for the Amazon-Future deal in abeyance and directed Amazon to file a fresh notice in Form II.
It also imposed a penalty of ₹202 crore on Amazon under Sections 43A, 44 and 45 of the Competition Act for failure to notify the combination properly, making false statements and suppressing material information.
Amazon challenged this order before the National Company Law Appellate Tribunal (NCLAT), which substantially upheld CCI’s view. It held that Amazon had failed to provide relevant information about the combination and remained responsible for not giving proper notice.
The Tribunal declined to interfere with the penalty under Section 43A, directed Amazon to pay it within 45 days.
Amazon was represented by Senior Advocates Gopal Subramanium and Arvind Varma with advocates Pawan Bhushan, Anand Swarup Pathak, Shashank Gautam, Sreemoyee Deb, Anubhuti Mishra, Param Tandon, Nandini Sharma, Anisha Bothra, Smridhi Sharma, Mahima Chauhan, Jayavardhan Singh, Raghav Kohli, Ankit Malhotra, Hima Lawrence and Kunal Chatterji.
CCI was represented by Additional Solicitor General N Venkataraman, with Advocates Sanyat Lodha, Manu Chaturvedi, Bhavya Bachani, Yashika Bhardwaj, Shivani Mehta, Chandrashekhara Bharati, Shivshankar, Nakul Madan and Abhishek.