“Do I have to ask Big Brother in America?” Retailer on Reliance vs Amazon

Mukesh Ambani often presents Reliance telecommunications and retail companies as nation-building initiatives.

A battle between Amazon.com Inc. and Reliance Industries Ltd. to dominate India’s $ 1 trillion consumer market is stoking nationalist rhetoric in court and outside, as the two companies battle for the future of a local retailer. in difficulties.

At the center of the case are Amazon’s efforts to block Reliance’s planned purchase of Future Group’s assets, saying the Indian retailer violated a contract by agreeing to a sale to a rival controlled by billionaire Mukesh Ambani. The Delhi High Court is now weighing whether the US e-commerce giant has any legal basis to object to the transaction and a ruling is expected in weeks.

The legal dispute has not only revealed the intensity of the fight between two of the world’s richest men, Jeff Bezos and Ambani, but has also sparked a “foreign versus local” debate. An attorney for Future, in their argument, described Amazon as “Big Brother in America” ​​for crushing a local small business, while a retail lobby group declared its “support for the Indian company Future Group in their fight against the foreign Amazon “.

For its part, Amazon wants Indian courts and regulators to enforce a commercial contract in what it sees as a commercial dispute. If Future is allowed to breach its contract with Amazon, it may signal to global investors that investments in India are risky, the US company claims. That’s an inconvenient picture at a time when Prime Minister Narendra Modi needs foreign investment to create jobs and restart an economy hit by the pandemic.

The stakes are high for both Amazon and Reliance. Securing Future’s assets will give Reliance, already the nation’s largest retailer, an unmatched advantage in a market where most consumers still prefer to shop in stores. That’s an advantage Amazon isn’t willing to give up. Amazon is also not willing to be overshadowed by nationalist arguments after losing ground to local rivals in China. India, with its more than a billion consumers, is indeed the last great growth frontier.

Ambani, 63, has also been playing the nationalist card. The mogul, who has been warning against data colonization since 2018, often portrays Reliance as a local champion and his telecom, retail and digital companies as nation-building initiatives.

Vocal for local

This week, Reliance Retail featured the slogans “Indie” and “Swadesh”, that is, from the country itself, on its e-commerce websites to promote indigenous crafts and textiles, in keeping with PM Modi’s call to be ” Vocal for Local “. In a key May speech, Prime Minister Modi mentioned “self-reliance” at least 17 times during a 33-minute address to the nation.

In August, Reliance announced the purchase of $ 3.4 billion of the indebted Future Group, which was suffering a severe liquidity crisis caused by the fall caused by the coronavirus. Amazon, which owns a 49% stake in an unlisted Future Group entity, opposed this transaction and obtained an order from a Singaporean arbitration court temporarily suspending the sale of assets. Future filed an application against this freezing order in the Delhi High Court.

East India Co.

Harish Salve, the celebrity attorney representing the publicly traded Future Retail Ltd., told the court that Amazon was behaving “like the East India Company of the 21st century.” Amazon’s position is “either you do business with me or you close,” he said, emphasizing that an aborted asset sale deal will lead to thousands of lost jobs and bankruptcy.

The East India Company, made up of a group of British merchants who came to India in the 17th century to trade spices and ended up colonizing the country for centuries, has been an unpleasant memory in Indian history. This emotional reference marks the latest dispute between India and outsider this year that also saw Google face pushback from Indian startups and more than 200 apps from Chinese tech companies that were banned following a military showdown along the border between IndoChina.

“Amazon has no investment in Future Retail,” Salve said in court. “Reliance wants to buy, but do I have to ask Big Brother in America?” he said, asking whether a foreign company should be able to control the business of an Indian company.

$ 6.5 billion

Amazon’s lawyer, Gopal Subramanium, a former attorney general of India, responded that the American electronic retailer was not Big Brother or the East India Company and had in fact introduced Future Retail to a potential investor to ease their distress. . Amazon has created thousands of jobs and invested $ 6.5 billion in India so far, he said.

Reliance’s lawyer has argued that the Singapore arbitration court’s emergency order halting the transaction is not recognized by Indian law and that the deal is crucial to saving the retailer from collapse.

These arguments in court were prompted by a legal request from Future Group after Amazon wrote to India’s antitrust and market regulators informing them of Singapore’s arbitration order of provisional suspension.

Amazon suffered its first setback in the case last week, when the antitrust regulator, the Competition Commission of India, approved the Reliance-Future deal. Previously, Reliance said it intends to complete the transaction “without delay.”