Mukesh Ambani is exploring a countersuit against Jeff Bezos’ Amazon.com Inc. in India after the US e-commerce giant blocked Reliance Industries Ltd’s (RIL) bid to buy Future group assets in a Singapore court, while Asia’s richest man takes on the world’s richest man for supremacy in India’s retail market, said two people directly aware of the development.
Both RIL and the Future group are likely to go to court challenging the clause invoked by Amazon in the Singapore arbitration court to stop Reliance Retail Ventures Ltd (RRVL) from acquiring Future group assets, they said. people on condition of anonymity.
The assets of the debt-laden Future group, which includes the popular supermarket chain Big Bazaar, are the bone of contention between the two billionaires. Industry watchers say the assets could give RIL an unassailable edge in its battle with Amazon for supremacy in India’s retail market, which is expected to grow at an average annual rate of 11% to $ 1.3 trillion by 2025.
Amazon, on Sunday, won the provisional relay from the Singapore International Arbitration Center (SIAC). The order stalled partner Future Group’s plan to sell its retail and wholesale assets to Reliance Retail Ventures Ltd for ₹24,713 crore.
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At the center of the dispute is an August 2019 investment pact between Amazon and Future in which the US retail giant acquired a 49% stake in Future Coupons Pvt. Ltd (FCPL) to ₹1,430 crore. The investment gave Amazon an indirect 5% stake in Future Retail Ltd, which owns Big Bazaar. The non-compete clause in the agreement restricted FCPL and its promoters from forging any alliance with RIL, among 30 other entities.
“Prima facie, RIL’s argument is that Amazon is acting arbitrarily and unfairly when it insisted that RIL be listed as a restricted entity when it agreed to invest in Future Coupons in 2019,” said one of the three people cited above. Amazon is well aware that the Future group’s cash position was not good, but despite that, it effectively blocked Future from raising money from names Amazon was not comfortable with. This is malicious in nature, which both RIL and Future would challenge in an Indian court (s), “added the first person cited above.
RIL, Amazon India and the Future group did not respond to emails seeking comment.
A person close to Amazon said the company will discuss with Future whether the two groups could continue the case at SIAC and follow the final judgment of the court. “The second option could be to go to an Indian court if Future is unwilling to continue at SIAC or reopen discussions with Amazon to bring in a new partner or investor while canceling the RIL deal,” the person said.
In a statement Sunday night after the interim order, RIL said it plans to enforce its rights and complete the transaction in terms of the scheme and the agreement with the Future group without delay. Taking a similar stance, Future said on Monday that the SIAC order will have to be “tested under the provisions of the Indian Arbitration Act in an appropriate forum”, adding that “in any enforcement proceedings Future Retail Ltd would take the Appropriate measures to ensure the proposed transaction will proceed smoothly and without delay. “
The arbitration ruling gives Amazon some breathing space as a Future-RIL combination is likely to pose a threat to the online retailer.
“With SIAC’s relief, Amazon will have enough time to plan its next step in expansion or an alliance with another Indian company to become strong enough to compete with RIL, even if Future Group finally goes ahead with the RIL deal,” said the second person, a senior attorney.
Amazon will have to go to an Indian court for enforcement of the Singapore court award. “Arbitration awards are not self-enforceable. Therefore, the winner (Amazon) will consider moving a competent court in India, “said Neerav Merchant, partner at Majmudar and Partners.
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