The Competition Commission of India (CCI) has imposed a penalty of Rs 202 crore on Amazon and suspended its approval for the e-tailer’s deal with Future Coupons, seeking more information.
In an order issued on Friday, the CCI said that Amazon ought to have notified the combination and Future Retail (FRL) shareholding agreement for the purpose of acquisition of strategic rights over FRL through FCPL shareholders’ agreement (SHA); and commercial agreements between Amazon and Future groups, for the purpose of establishing strategic alignment and partnership between Amazon Group and FRL as well as have a ‘foot-in-the-door’ in the Bharatiya retail sector.
Amazon failed to notify FRL SHA and the commercial arrangements, as part of the combination between the parties, and suppressed the actual purpose and particulars of the combination, as discussed above, in contravention of the obligation contained in sub-section (2) of Section 6 of the Companies Act read with Regulation 5 and sub-regulations (4) and (5) of Regulation 9 of the Combination Regulations, the CCI said.
Given that the combination is between players who are known in the online marketplace and offline retailing, and they have contemplated strategic alignment between their businesses, the Commission considers it necessary to examine the combination afresh based on a notice to be given with true, correct and complete information, as required therein, the order said.
Accordingly, in exercise of the powers conferred under sub-section (2) of Section 45 of the Act, the Commission directed Amazon to give notice in Form II within a period of 60 days from the receipt of the order, and, till disposal of such notice, the approval granted vide order dated November 28, 2019, in Combination Registration shall remain in abeyance, the CCI said.
As regards failure to notify combination in terms of the obligation cast under Section 6(2) of the Act, Section 43A of the Act enables the Commission to impose a penalty, which may extend to 1 per cent of the total turnover or the assets, whichever is higher, of such a combination.
Accordingly, for the above mentioned reasons, the Commission imposed a penalty of Rs 200 crore on Amazon. Another penalty of Rs 2 crore has been imposed as all the contraventions arise from a deliberate design on the part of Amazon to suppress the actual scope and purpose of the Combination.
On its part, an Amazon spokesperson said: “We are reviewing the order passed by the Competition Commission of India, and will decide on the next steps in due course.”
Traders’ body CAIt said the order of the CCI penalising Amazon and suspending the approval for the Future deal is a landmark move and Amazon stands fully exposed for its mal-practices, and bunch of lies at all levels together with continued violation of laws and rules of the land.
The trading community of Bharat under the flag of the Confederation of All India Traders (CAIT) stands vindicated, it said. The CAIT has also demanded Union Conmerce Minister Piyush Goyal to order immediate suspension of the Amazon portal in Bharat.
CAIT Secretary General Praveen Khandelwal said that the vicious bid of Amazon to control Bharatiya companies has been foiled by the CCI.