In an interim relief to Amazon, Singapore-based single judge arbitration panel has ruled that Reliance Retail and Future Group should not proceed with the deal until it hears the matter, said a Bloomberg report.
Almost two months ago, Reliance Industries-owned Reliance Retail Ventures had announced the acquisition of Future Group’s retail, wholesale, logistics and warehousing business in a deal worth Rs 24,713 crore.
Amazon has confirmed the interim relief from Singapore International Arbitration Centre or SIAC to Entrackr.
“We welcome the award of the Emergency Arbitrator. We are grateful for the order which grants all the reliefs that were sought. We remain committed to an expeditious conclusion of the arbitration process,” said an Amazon spokesperson.
Amazon has been referring to a non-compete clause that bars Future Group from striking any deal with 30 companies including RIL without its approval.
Reliance, on the other hand, has maintained that acquisition is legal and its rights and obligations are fully enforceable under Indian law. “…..RRVL intends to enforce its rights and complete the transaction in terms of the scheme and agreement with Future Group without any delay,” said Reliance in a media statement.
Amazon had picked up a 49% stake in Future Coupons Pvt Ltd for Rs 1,430 crore. The e-commerce giant got a minority stake in Future Retail with the right to buy into Future Retail after a period between 3 and 10 years.
It’s worth noting that Amazon didn’t invest in Future Retail directly because of the limitations of foreign direct investment or FDI in retail. The e-commerce giant has been alleging Future Group for violating non-compete clauses, saying yes to acquisition sans its approval and Amazon’s effort to bring fresh investors to the debt-strapped group.
On contrary to Amazon claim, Future Group has been maintaining that it didn’t violate any clause as Amazon doesn’t own a direct stake in its retail business.
A month ago, Reliance approached Competition Commission of India or CCI for approval of Future Group’s acquisition. The commission is yet to give a final verdict in the matter.
While Amazon moved to Singapore against the RIL-Future Group deal, it’s still willing to help the Biyani-led group through finding new investors.
If the acquisition of Future Group by RIL gets through, it will impact Amazon’s marketplace platform in India significantly. Reliance had entered into e-commerce through its platform JioMart in May. Within four months of launch, the platform became the largest e-grocer in the country. It recently started fashion and electronics categories too.
Reliance will leverage Future Retail’s network to ramp up its e-commerce business through an omnichannel model. JioMart will leverage the group’s retail stores to deliver items in many categories within hours in any particular city.