InvestorQ : What is the meaning of the latest Delhi High Court ruling on the case involving Amazon, Reliance Retail and Future Group?
swati Bakhda made post

What is the meaning of the latest Delhi High Court ruling on the case involving Amazon, Reliance Retail and Future Group?

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Sam Eswaran answered.
4 weeks ago
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The Future Group / Amazon case has kept the courts busy, but first a quick background. When RIL and Future group signed a Rs.24,723 deal to merge most of Future group into Reliance Retail, Amazon objected to the deal, In fact, Amazon even obtained a stay from a Singapore based arbitration Court to put the deal on hold.

Why did Amazon object to the deal and why does it want the deal on hold? The view of Amazon is that it holds a stake in Future Coupons Private Limited and as part of the agreement it should have been offered the right of first refusal before the Future Group sold all its interests to RRVL. Obviously, the real game is about domination of retail space.

On Monday, the Delhi High Court had cleared the merger deal and clearly stated that they did not see any reasons for objections and for holding up the merger deal. At the same time, the Honourable Delhi High Court had upheld Amazon’s right to make a statutory appeal or representation at the appropriate legal forums.

In the latest twist, the High Court has noted that any such agreement signed by Amazon with any of the Future group companies would be a clear violation of FEMA-FDI rules, if it entails a potential sale of stake in a domestic company to Amazon. That is not permitted by FDI rules and hence such a deal would be void ab initio.

Meanwhile, Amazon has dragged the case to the MCA, where the final word is still expected. The Indian retail industry is boiling down to 3 large digital/physical retail players viz. Flipkart + Wal-Mart, Reliance + Future Group and Amazon. Obviously, any competitor would want to prevent the consolidation of competition.

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