Amazon Moves SC Against NCLAT Upholding CCI Order In Future Group Investment Case

by Swarajya Staff - Jul 30, 2022 11:12 AM +05:30 IST
Amazon Moves SC Against NCLAT Upholding CCI Order In Future Group Investment CaseThe Supreme Court of India. (Twitter)

E-commerce major Amazon has moved Supreme Court against an order of the NCLAT, which upheld fair trade regulator CCI's decision to suspend its approval for investment in a Future Group company.

The National Company Law Appellate Tribunal (NCLAT) on June 13 rejected Amazon's plea challenging the decision of the Competition Commission of India (CCI) to suspend the approval for the e-commerce major's deal with Future Coupons and directed the company to pay over Rs 200 crore penalty imposed on it, within next 45 days.

The said order has now been challenged by Amazon before the apex court. In its petition, a copy of which has been seen by PTI, the e-commerce major has said the NCLAT order has several glaring defects and suffers from a total non-application of mind by the appellate tribunal.

The matter is expected to be listed next week before the apex court. In December last year, the 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 to notify the combination in the requisite terms and two penalties of Rs 1 crore each for suppressing the actual scope and purpose of the combination.

The CCI order was challenged by Amazon before the NCLAT, an appellate authority over the fair trade regulator, which in turn upheld the findings.

The NCLAT said the e-commerce major "has not made full, whole, forthright and frank disclosures of relevant materials and had furnished only limited details / disclosures, pertaining to its `acquiring strategic rights and interests’ over `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)... ", NCLAT had said.

Opposing it, amazon in its petition has contended both CCI and NCLAT noted it had committed a ‘fraud’ while obtaining the Approval Order. While arriving at this conclusion, the NCLAT has erroneously adopted and relied upon the concept of fraud and misrepresentation from the Indian Contract Act, 1872, which is not applicable to proceedings under the Competition Act.

While questioning the rationale of the Rs 200 crore fine on it, Amazon said, since its inception, the CCI has not levied a penalty of similar magnitude, and its order records no reasons for the same.

This is also contrary to the well-established principles of reasonableness and proportionality, it added.

Curiously, NCLAT found the levy of a penalty of Rs 1 crore for violation of Section 44, and Section 45 ‘excessive’, while observing that the penalty imposed under Section 43A was 'fair and sensible'.

NCLAT also failed to consider Amazon's submissions in the notification wherein it has unequivocally noted that FCPL was not engaged in any business activities in the retail market, FRL was the flagship retail entity of the Future group; and the Proposed Combination pertains to the overall retail market in India.

Moreover, NCLAT also failed to appreciate Amazon's submissions in relation to the CCI Order being passed in the absence of a judicial member, which is contrary to the observations and directions of the Division Bench of the High Court of Delhi.

NCLAT failed to appreciate that the present case involves complex questions of law, inter alia, relating to the interpretation of CCI's powers under the Competition Act, which necessitated the presence of a judicial member.

Amazon has also raised the issue of allowing trade body CAIT, which was a "stranger" to participate in the proceedings, which vitiated the proceedings themselves. According to Amazon, CAIT (Confederation of All India Traders) was not a relevant stakeholder, not a party to the Combination and nor a beneficiary of the proceeds of its investment in the Future group.

(This story has been published from a wire agency feed without any modifications to the text. Only the headline has been changed.)

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